Sometimes you just say ‘no’ to new business
Everyone’s in the business of making new business; and rarely do you ever want to say “no” to a prospect. But Linda Trugman, CPA/ABV, MCBA, ASA, MBAA, recently told the tale of an attorney who called her up, responding to an item in the firm’s newsletter (Trugman Valuation Associates, www.trugmanvaluation.com). He also wanted a copy of a cited legal case. “We took him off our [marketing] list,” Linda said. Any attorney who can’t find his own copy of a legal case—or who doesn’t have the resources to get one from a library—probably isn’t a viable business prospect for appraisers.
And say ‘yes’ to client newsletters
Trugman and others BV leaders such as Chris Mercer, ASA, CFA (www.mercercapital.com) and Harold Martin Jr., MBA, CPA, ABV, ASA (www.kshgs.com), still swear by newsletters as a premier marketing tool to clients and selected referral sources. Mercer began consistently publishing his own newsletter back in 1987; Martin began in-house but soon discovered that the time commitment was “prohibitive.” Martin now subscribes to a newsletter service, as does Trugman, who (surprise!) uses the subscriber service from BVResources. Trugman still finds this custom-tailored newsletter service to be the best way to get her firm’s name in front of clients and referrals four times a year. For more information, go to BVResources.com.
Congressional wheels still grinding on appraiser standards . . .
Revising the IRS’s “current and ineffectual definition of who is a ‘qualified appraiser’” is now at the top of the to-do list for ASA BV Committee Chairman Mike Hill Jr., ASA, CPA/ABV, and its government relations consultant, Peter Barash, according to the ASA’s most recent e-letter (www.appraisers.org). First, the appraisal reforms were stripped from the final House/Senate conference version of H.R. 4297 (Tax Relief Act). Then they resurfaced in the Senate’s modified version of S.832 (Taxpayer Protection and Assistance Act), and H.R. 2830 (Pension Reform Bill), but the wheels of government bureaucracy continue to grind slowly, despite the ASA’s joining forces with the Appraisal Institute to double their lobbying power. Until Capitol Hill emerges from the summer doldrums, you can download the most recent IRS appraisal standards for free at BVresources.com; just click on the “Valuation Resources” link.
. . . while half of IRS estate/gift attorneys get the ax
More is sure to surface on IRS appraiser standards at the ASA International Conference in Brooklyn next week, especially given the New York Times’ announcement just this past Sunday that the IRS is cutting half of its in-house gift and estate attorneys: (www.nytimes.com/2006/07/23/business/23tax.html). The IRS says the cost savings will allow it to hire more agents to audit estate/gift returns—but detractors say that the cuts are the Bush administration’s “back door” attempt to repeal the Death Tax.
With all the current questions causing a summer buzz, don’t miss the chance to register for Ask the IRS telephone conference this Thursday, July 27, 2006, featuring Michael Gregory, ASA, an IRS Engineering Territory Manager; and Roger Wilde CPA, ABV (Anacapa Valuations). Go to www.bvresources.com/conferences.
Question on tax-affecting a charitable leasehold interest
“I am appraising a leasehold interest in an office building next to a University Hospital, [which] is a qualified charity,” writes BVR subscriber Brian Sullivan, CPA (www.sullivanco.net). “The leases that will be donated to a qualified charity have a lease term expiring in 8 years; 76% of the tenants (leasees) are physicians contracted by the Hospital. The landowner will qualify for a charitable deduction equal to the difference between the PV of the leasehold interest less the bargain purchase payment made by the charity. Since the tenants are all AAA quality, the proposed discount rate is 5.5%, which approximates the 10-year Treasury Bond rate. That said, should the cash flow be tax-affected…since the donee is a tax-exempt organization; or should another benchmark be used to reflect the appropriate discount? (P.S.: The PV of the leasehold interest using the discount rate of 5.5% on non-tax adjusted net cash flow is $14.5 million.)”
To answer Brian’s question in the critical (and controversial) tax-affecting arena, we turned to our BVR panel of experts, including Dan Van Vleet, ASA, CBA, Managing Director, Duff & Phelps, LLC (www.duffandphelps.com). To see Van Vleet’s response, click here.
Transcripts and/or CDs of BVR’s Tax Affecting telephone conference (June 8, 2006) are still available at www.BVresources.com.
Disaster planning at the height of hurricane season
Staffers at the IBA (Institute of Business Appraisers) have survived seven hurricanes over the years, most recently the wrath of Wilma, which struck in October, 2005. Such disastrous experience had honed the Institute’s reaction response—and its packing skills, “so that every employee had his or her key materials down to a single box and a remote employee workstation ready to go,” says executive director Michele Miles, JD, who wrote about the IBA’s experience—and their empathy for victims of hurricane Katrina—in this summer’s Valuation Strategies. Within hours of Wilma’s devastation, the IBA was back on-line; within three months, it had “nearly moved back to repaired space. Our interim loans have been repaid, and our insurance claims . . . accepted, thanks to an overload of documentation.”
Miles also gives credit to disaster planning resources such as the SBA’s toolkit (www.sba.gov/disaster/getready.html#facilities); and electronic documentation storage by FedEx/Kinko’s, OfficeMax, and other national providers. The IBA also urges appraisers “to act like the fortunate,” and help those affected by Katrina and other national disasters. For more on its giveback program, “On the Shoulders of Giants,” visit www.go-iba.org.
So you want to be an M&A speaker: get your proposal in now
The M&A Advisor (www.maaadvisor.net) is currently seeking speakers for its annual conference in New York on December 11-12, 2006. The self-described “leading newsletter, website and conference host for professionals in middle market M&A” will accept submissions related to middle market M&A and finance, including business and individual tax and accounting issues, business valuation, due diligence, etc. Panels may focus on hot (or cold) industry-oriented sectors such as healthcare, biotech, best M&A practices; the conference is open to “any related topic which you think is relevant to people working in middle market mergers and acquisitions.” But hurry: the deadline for submissions is July 31, 2006. Email firstname.lastname@example.org; or call the M&A Advisor staff at 718-997-7900.
Latest ValuSource upgrade
ValuSource, arguably the market leader in business valuation software, is rolling out the newest version of its high-end package: ValueSource 4.0 (www.valusourcesoftware.com), due in September. For the M&A firms, professional appraisers, and business consultants who may be considering the upgrade (and its $895 price tag), we’ll provide a “hands-on” review in an upcoming issue of Business Valuation Update™. Stay tuned . . .
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