Recent scrutiny on the part of the Tax Court in reviewing discounts for lack of marketability and control has placed renewed emphasis on the accuracy and defensibility of these adjustments to limited partnership interest appraisals. In addition to objecting to how discounts are substantiated the Court has expressed dissatisfaction how empirical data is used to derive these discounts and the subjectivity in which those discounts were determined.
In "Using Empirical Data to Value Family Limited Partnerships," part 3 of BVR's Online Symposium on Estate & Gift Tax, expert Bruce Johnson explains the best practices by which to select and apply empirical data to FLP valuations. Given recent decisions from the courts and other reviewers Johnson's presentation is not to be missed.
Program Agenda
Valuing FLPs Using the Traditional Method
The Asset Based Approach Using a Case Study
Relevant Court Cases
Pitfalls of Using General Averages
Alternative Approaches Using a Case Study
The Income Approach and Rates of Return
The Market Approach and using Market Data
Determining a Discount for Lack of Marketability
Important Points to Remember
Learning Objectives
Learn the objectives and shortcomings of traditional approaches to valuing family limited partnerships (FLPs)
Learn what the courts are saying about FLP valuation and what this means for the appraisal process
Understand how to apply rates of return to the income approach to valuing FLPs and market data to the market approach
Understand the methodology through which discounts for lack of marketability, control, and liquidity are determined and applied
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