IRS-compliant valuations for wealth transfer, succession planning, and tax reporting.
When transferring ownership interests in a privately-held business—whether through lifetime gifts or at death—the IRS requires fair market value to be established by a qualified appraisal. These valuations determine the taxable value of the transfer and directly impact gift and estate tax liability.
The IRS defines fair market value as "the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts."
Valuation discounts can significantly reduce tax liability. Minority interest discounts and lack of marketability discounts are commonly applied, but must be properly supported to withstand IRS scrutiny.
Wealth transfer events requiring IRS-compliant valuations
Transferring business interests to family members during your lifetime requires valuation for Form 709 (Gift Tax Return) reporting.
At death, business interests must be valued for Form 706 (Estate Tax Return) to determine estate tax liability.
FLP and LLC structures for estate planning require valuation of limited partnership interests with appropriate discounts.
Transferring a business to the next generation—through gifts, sales, or trusts—requires defensible valuation.
Donating business interests to charity requires a qualified appraisal for tax deduction purposes.
Grantor Retained Annuity Trusts and Intentionally Defective Grantor Trusts require valuation for funding and tax compliance.
IRS-compliant methodology with defensible conclusions
We work with your estate planning attorney and CPA to understand the transfer structure and ensure our valuation supports the overall plan.
We gather financial statements, tax returns, organizational documents, and conduct management interviews to understand the business.
We determine the total enterprise value using income, market, and asset approaches as appropriate for the business type.
We analyze and apply appropriate discounts for lack of control and lack of marketability, fully documenting our conclusions with empirical support.
We deliver a report meeting IRS qualified appraisal requirements, suitable for attachment to Form 709 or 706.
If the IRS questions the valuation, we provide full support—from responding to information requests to testifying if necessary.
The IRS defines specific requirements for qualified appraisals, including appraiser qualifications, report content, and timing. We ensure our reports meet all requirements.
The valuation date should be close to the transfer date. We recommend starting 4-6 weeks before the planned transfer to allow time for analysis and report preparation.
The IRS frequently scrutinizes valuation discounts. We support every discount with empirical studies, market data, and specific factors of your interest—creating a defensible position.
Methodologically similar, but timing differs. Gift valuations are dated when the gift is made; estate valuations are dated at death (or alternate valuation date). Different forms are filed.
A single valuation can support gifts made on or near the valuation date. For gifts spread over time, updated valuations may be needed to reflect changed circumstances.
S-corps avoid entity-level taxation, which can increase value. C-corps may warrant built-in gains discounts. We analyze the specific tax attributes of your entity.
Protect your transfer with a qualified, defensible valuation.