Estate & Gift Tax Business Valuations

Qualified appraisals for estate and gift tax filings, prepared to NACVA standards and built to withstand IRS review.

What this engagement is

When a business interest transfers by gift or at death, the IRS requires the value reported on the return to be supported by a qualified appraisal. This engagement produces that appraisal: an independent, fully documented valuation of the business interest as of the transfer date, prepared to withstand examination. The stakes are not abstract. An unsupported value invites an audit, penalties, and a negotiation with the IRS conducted from a position of weakness. A qualified appraisal, prepared properly the first time, is the cheapest insurance in estate planning.

These engagements frequently involve minority interests, family limited partnerships, and closely held stock, where discounts for lack of control and lack of marketability drive the outcome. Those discounts must be supported by evidence and analysis, not asserted. That is precisely where credentialed work earns its fee.

Who orders it

Estate planning attorneys and CPAs order most of these engagements on behalf of their clients, and executors order them for estates in administration. We work alongside the advisor team: the attorney structures the transfer, the CPA files the return, and we supply the independent value that both of them can stand behind. Your client, your relationship, our analysis.

What standard governs it

Revenue Ruling 59-60 is the foundation: it defines fair market value and the factors the analysis must consider. The report is prepared to NACVA professional standards as a conclusion of value, the full opinion tier, because that is what tax filings require. It also satisfies the qualified appraisal requirements so the return receives adequate disclosure protection, which starts the statute of limitations running and takes the open-ended audit exposure off the table.

What the deliverable looks like

A complete written appraisal report: the standard and premise of value, the valuation date, a description of the interest, the economic and industry context, normalized financials, all relevant approaches with the weighting explained, supported discounts where they apply, and a concluded value stated plainly. Every number in the report traces to a source. If the IRS asks a question in three years, the answer is already in the document.

Timeline

Most estate and gift engagements deliver in three to five weeks from receipt of complete records. Filing deadlines are firm, so tell us the due date at the first call, including extensions, and we will build the schedule backward from it.

How the process works

The engagement begins with the transfer itself: what interest is moving, to whom, and as of what date, because the valuation date controls everything that follows. We gather the entity documents, three to five years of financials and returns, and any agreements that restrict the interest. We normalize earnings, apply the approaches Revenue Ruling 59-60 requires the analysis to consider, and, where the interest is a minority position or lacks a ready market, develop the discounts from published studies and the specific facts of the entity rather than from habit. The attorney and CPA receive a draft for review of the factual record before the report is finalized for the return.

Why discounts are where audits are won and lost

On paper, a 30 percent combined discount and a 40 percent combined discount look like a ten point difference. On a large transfer, that difference is the tax bill. The IRS does not challenge the arithmetic of a discount. It challenges the support: the restrictions in the operating agreement, the distribution history, the transfer limitations, the studies cited and how they were applied to this entity rather than to entities in general. A discount asserted without that record is an invitation. A discount built on that record is a defense that usually means the question never gets asked twice.

Where to start

If a transfer is being planned or a return is coming due, contact us and we will scope the engagement with your attorney or CPA on the same call. If you are earlier in the planning process and simply want to know what the business is worth today, start with the no-cost indication of value at indication.oakstonevaluationgroup.com.