Taxpayers' appraisers in a tax court slump
Article Abstract:
The US Tax Court's 1996 decisions in the Freeman, Cloutier, and Scanlan cases disregarded appraisers' expert testimony on valuation issues concerning closely held businesses and stock. In all three of these estate and gift tax cases, the plaintiffs lost because their experts were unconvincing. The Cloutier expert witness failed to comprehend the discount and fair market value issues involved; the Freeman appraiser-witness disregarded the information found in his own previous appraisals; the Scanlan witness failed to answer properly the questions posed by the court.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1997
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Dissecting the discount for lack of marketability
Article Abstract:
The percentage discount for lack of marketability of close corporation stock that the Tax Court arrived at in Mandelbaum appeared reasonable, but the court considered factors that are not generally considered part of the discount for lack of liquidity. Factors noted by the Tax Court such as absence of control or financial statement information are not usually factored in to the lack-of-marketability discount. The court appeared to integrate overall valuations and lack-of-control discounts into its valuation method.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1996
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The outer limits of minority discounts
Article Abstract:
Courts have generally supported estate plans designed to allow minority discounts in valuation based on lack of control as seen, for example, in the 1996 Bonner case. However, practitioners should be aware of the limits on minority discount adjustments imposed by the Tax Court in the 1996 Cidulka gift tax case. In Cidulka, the minority discount was denied when gifts of closely held shares were considered to be part of a redemption of other shares.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1996
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