Business Valuations and the IRS

Five Books in One

The most comprehensive publication ever written for business valuers who prepare appraisals for federal tax purposes.

It compiles five books into one book with five parts, with the first two parts presenting processes and approaches to resolve conflict, followed by three parts addressing the most common adjustment areas by IRS engineers and valuers.

PART ONE offers an orientation to IRS organization and culture, IRS official and unofficial rules of engagement, how classification works in general and in business valuations in particular, suggestions for how to work with IRS valuers and specialists, and recommendations for using expert witnesses.

PART TWO shows the reader how to resolve issues with the IRS. The most common errors in valuation are presented, followed by strategies for issue resolution and mediation, suggestions for using the IRS evaluation process to resolve issues, strategies for resolving conflicts with IRS teams and agents, and suggestions for writing a business valuation report for the IRS while avoiding potential penalties.

PART THREE focuses on S-corp valuations and the additional risks associated with S-corps. Fifteen items are presented that business valuers should request from clients in every S-corp valuation. Recommendations are then offered based on how the IRS approaches S-corp valuation issues.

PART FOUR addresses reasonable compensation. This includes a thorough review and critique of the IRS Job Aid on reasonable compensation as well as its extremely useful appendix. Specific recommendations are presented based on practical experiences with the IRS.

PART FIVE provides the reader with the most current thinking, ideas, tools and approaches related to Discount for Lack of Marketability. The IRS Job Aid is presented and critiqued with the most current thinking by then-current as well as new models used by valuers.

The Text Contains

  • 852 pages, with over 180 Practical Pointers that are placed at the end of each chapter. These are hands-on.
  • 38 Examples (1-to-4 page real-life stories from Mike's actual experiences working with valuation issues in all areas covered by the book)
  • 25 Golden Suggestions for avoiding/reducing/resolving conflict with the IRS
  • 44 Helpful Charts and Photos scattered throughout the book
  • 233 Need-to-Know IRS Terms in a special IRS Glossary
  • 150 Acronyms for Valuation professionals
  • Audit Process Chart, Negotiation Process Chart, Negotiation Strategies Chart
  • 3 full Job Aids covering most the common areas of valuation friction between Taxpayers and IRS written by original champion with up-to-date commentaries by that same champion plus inputs by many other valuation professionals who were specially solicited for comments for this edition by the author

TABLE OF CONTENTS
  • ABOUT THE AUTHOR
  • PREFACE
  • PART ONE: IRS STRUCTURE AND PROCESS
  • CHAPTER 1: IRS CULTURE - THEN AND NOW
  • EXAMPLE 1 - Coaching Clients
  • CHAPTER 2: UNDERSTANDING IRS RULES OF ENGAGEMENT AND HOW TO USE THEM
  • EXAMPLE 2 – How to Approach an E&G Manager on a Non-Developed Issue
  • CHAPTER 3: CLASSIFICATION AT THE IRS
  • EXAMPLE 3 - Pre-Filing Proactive Steps E&G
  • EXAMPLE 4 - Demand Pull Versus Supply Push
  • EXAMPLE 5 - National Classification Process and Shifting Sand
  • EXAMPLE 6 – Classification and an Appraisal Report vs. a Calculation Report
  • EXAMPLE 7 – Estate and Gift Tax Attorney Proposal without Development
  • CHAPTER 4: WORKING WITH VALUERS AND SPECIALISTS AT THE IRS
  • EXAMPLE 8 – How a Valuation Report May Be Reviewed by an IRS Engineer
  • EXAMPLE 9 – Using DLOM Factors with the IRS
  • EXAMPLE 10 – Review of Expert Witness DLOM
  • EXAMPLE 11 – Reasonable Compensation for a High Earner
  • EXAMPLE 12 – 409A Creative Proposal
  • EXAMPLE 13 – International Transfer Pricing Case
  • CHAPTER 5: EXPERT WITNESSES AND THE IRS
  • EXAMPLE 14 - Staying in Your Lane as an Expert Witness
  • EXAMPLE 15 - Looking Under the Hood of a Litigating Vehicle
  • PART TWO: RESOLVING CONFLICT WITH THE IRS
  • CHAPTER 6: THE MOST COMMON ERRORS IN APPRAISALS AND TEN GOLDEN RULES
  • EXAMPLE 16 - DLOC Documentation
  • EXAMPLE 17 - DLOM Documentation and Reconciliation
  • EXAMPLE 18 – Build a Positive Relationship
  • EXAMPLE 19 – Taking the High Road Pays Off
  • EXAMPLE 20 – Time Out or Noting Tension in the Room
  • EXAMPLE 21 – Mediation Secrets for Better Business Negotiations
  • CHAPTER 7: ISSUE RESOLUTION AND MEDIATION AT THE IRS
  • EXAMPLE 22 - First Audit on a $50 Million Revenue Taxpayer
  • EXAMPLE 23 - Build Relationships: Listen, Educate, Then Negotiate
  • EXAMPLE 24 - De-escalating a Ticked-Off Executive
  • CHAPTER 8: USING THE IRS EVALUATION PROCESS TO RESOLVE ISSUES
  • EXAMPLE 25 – Issue Resolution Estate & Gift (E&G) Tax Case
  • EXAMPLE 26 – DLOM Change in Thinking
  • EXAMPLE 27 – Specialist Jargon
  • EXAMPLE 28 – Know Who the Decision-Maker Is
  • CHAPTER 9: RESOLVING CONFLICTS WITH IRS TEAMS AND AGENTS
  • EXAMPLE 29 – Complaining Does Not Work – Documenting and Dialogue Does
  • EXAMPLE 30 – Follow-Up with Management on Poorly Performing IRS Employees
  • EXAMPLE 31 – Example Feedback Regarding IRS Interviews
  • CHAPTER 10: WRITING A BUSINESS VALUATION REPORT FOR THE IRS WHILE AVOIDING PENALTIES
  • EXAMPLE 32 - Oral Commentary and Computation of Appraiser Penalty
  • EXAMPLE 33 - Computation of Appraiser Penalty
  • PART THREE: VALUING NON-CONTROLLING INTERESTS IN S-CORPS FOR THE IRS
  • CHAPTER 11: INTRODUCTION TO S-CORPS AND THE IRS
  • EXAMPLE 34 - There is No Policy at the IRS on Tax Affecting
  • EXAMPLE 35 - IRS Engineers Not Experts in International Tax
  • CHAPTER 12: IRS NON-CONTROLLING INTERESTS IN S-CORPS JOB AID WITH COMMENTARY
  • PART FOUR: VALUING REASONABLE COMPENSATION FOR THE IRS
  • CHAPTER 13: INTRODUCTION TO REASONABLE COMPENSATION
  • EXAMPLE 36 - Pay for Prior Years
  • CHAPTER 14: IRS REASONABLE COMPENSATION JOB AID WITH COMMENTARY
  • EXAMPLE 37 - CEO and Corporate Counsel Compensation
  • PART FIVE: DISCOUNT FOR LACK OF MARKETABILITY AND THE IRS
  • CHAPTER 15: INTRODUCTION TO DLOMS AND THE IRS
  • EXAMPLE 38 - Example DLOM Adjustment with the IRS
  • CHAPTER 16: IRS DISCOUNT FOR LACK OF MARKETABILITY JOB AID WITH COMMENTARY
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