Thoughts and Insights by Michael Gregory

Conflict Resolution

Two groups facing each other while sitting with the word negotiation in the background
December 5th, 2022

Business valuers, the IRS, and conflict resolution – Part 5 Negotiating with the IRS

The last two weeks I offered ideas on the Top Strategies for Negotiation Part One and Part Two. This article is one of a series of five articles over the past five months. The focus of this article is entirely with the IRS on a technical issue. Having worked for the IRS for 28 years at all levels from specialist to executive, having brought mediation and mediation training to the IRS Large Business and International Division and trained some 2,500 employees in the techniques, having been involved with over 2,500 mediations from boards of directors with fortune 100 companies on billion dollar issues, to the IRS on valuation issues or issues on research credit from thousands of dollars to a billion dollars, I wanted to offer you some insights on how to negotiate with the IRS on examination on these types of issues. Similar techniques can be used at Appeals and with IRS Counsel, but the emphasis there is on hazards of litigation. There is a different emphasis on examination that focuses on factual development. This commentary will introduce you to factual issues and negotiations on examination where issues are discussed and may be resolved factually.

A hand with a bouquet of three flowers
November 14th, 2022

Should you make the first offer in a multi issue negotiation? Yes, but…

When you are involved in a multi-issue negotiation you may have asked yourself whether you should make the first offer and if so on which issue? Should you offer something significant on a major issue? Should you offer a token offer on a minor issue? There are different schools of thought on this. Recent research from the Harvard Program on Negotiation at Harvard Law School offers some good insights for you to take advantage of this multi-issue negotiation. Additional insights are provided based on real world negotiations between a major taxpayer and the IRS.

Cover for the book Valuing Interests in S-Corps
November 7th, 2022

Business valuers, the IRS, and conflict resolution – Part 4 S-Corp issues

This is the fourth in a series of six monthly technical blogs on issues related to business valuation. Many business valuers believe that all entities whether a C-corp that is taxed or an S-corp that pays no federal income taxes should both be valued as if they pay tax (Grabowski, Mercer, Van Vleet)[i]. These business valuers believe there is no difference in the determination of fair market value. Others believe there is an S-corp adjustment to be made, but it should not be fully taxed (Fannon, Treharne)[ii]. These approaches suggest a premium for an S-corp. In general, the IRS believes that an S-corp should not be tax affected since it does not pay federal income taxes. This article looks at this issue in general. For a more complete analysis of this topic see original commentary dated Valuing Interests in S Corps (2013) or an updated and more comprehensive commentary within Business Valuations and the IRS (2018).   [i] https://www.amazon.com/Business-Valuations-IRS-Michael-Gregory/dp/1945148020 (423-433 and 436-441)   [ii] https://www.amazon.com/Business-Valuations-IRS-Michael-Gregory/dp/1945148020 (419-423 and 433-435)  

A group of keys on a ring
October 31st, 2022

What are the keys for a successful mediation?

Having been involved in over 2,500 mediations, facilitations, and negotiations in my career, I thought what are keys to a successful mediation? Revisiting this I want to offer you some thoughts that may help you. My experience is largely oriented towards the federal judicial system, working with experts and clients, administratively with the IRS, and as a volunteer in housing court, conciliation court, with neighborhood disputes, in public housing and other venues including between gangs. I have found that alternative dispute resolution focusing on mediation works, saves time and money, is confidential, and it is successful in implementation because the parties produced a solution that they can both live with going forward. What follows are some key elements and what I have found as best practices that you may find helpful too.

Climbing up steps
October 24th, 2022

When using a mediator what process might be used?

When humans interact on a conflict it does not mean there have to be negative consequences. Disputes, conflicts, or disagreements can be addressed in a number of ways, but sometimes a third party mediator may help the parties look at the situation differently allowing the parties to actually grow as part of the process. A trained mediator familiar with the area in question can often cut to the chase and help de-escalate the situation to focus on the substantive issues. In previous posts the various alternative forms of mediation were introduced (evaluative, facilitative, transformative) including with an application to family businesses. What these demonstrate is that mediation can play a vital role in addressing these types of disputes.

two people. One with hands on face and possibly crying. The other has arms crossed
October 10th, 2022

What mediation techniques should you use to resolve disputes between employees?

Invariably conflicts or disputes arise between employees for a variety of reasons. Often the best solution is for the two parties to determine how  to work amicably with one another. However, sometimes these issues simmer over time or become caustic in nature. As a manager or peer this can poison a work environment. As a leader you may be called upon to work with the parties to help them come to a solution that everyone as a minimum can live with going forward. The hope would be to come to a solution where everyone is pleased with the final outcome. In reality often times the final solution maybe anywhere between these two extremes. So, how can you do this?

Candle burning in foreground with lights in the background
August 15th, 2022

Does sympathy help during conflicts and negotiations?

Empathy puts yourself in someone else’s shoes emotionally. Sympathy by comparison is when you have feelings of pity or sorrow for someone else’s misfortune. In a dispute, conflict, or negotiation does sympathy work for or against you? You may be surprised. In this article by the Harvard Program on Negotiation they looked at five studies. What they found was that although you may have thought that sharing vulnerabilities may have caused the other side to pounce on the weakness, just the opposite was the case. Those that shared information about dealing with a difficult situation created a more mutually beneficial agreement. This commentary looks at this question a bit deeper.

five male and female professional dress in silhouette
August 1st, 2022

Business valuers, the IRS, and conflict resolution – Part 1 Setting the stage

This is the first in a six part series looking at this topic. Today the focus is on expert witnesses in federal court sessions having various rules to follow regarding their expertise and reports. Given these rules how can an expert demonstrate leadership, help with dispute resolution, or conflict resolution working with the client or client’s representative to resolve the case with the other party and the other expert? Business valuers are taught to be advocates for their position and not for their client. They are to be independent. Only a small number of cases actually make it to court. The question is how does an expert witness such as a business valuer serve their client best with an out of court settlement? This last question will be addressed in a future monthly blogs.

Four people in a negotiation
July 25th, 2022

Does lying in collaborative business deals really pay off?

As a promoter of collaboration, a mediator, a conflict resolution specialist, and a person that teaches ethics and negotiations, I did not initially appreciate the title  of The Dark Side of Collaboration offered by Scientific America. However, the subtitle of  “People working together often scheme to put profits ahead of telling the truth. New research points out ways to stop this behavior” gave me hope. I found this article extremely helpful and enlightening. This commentary that follows shares some of the highlights of that article and offers some additional observations.

People sitting around a table with one person standing about to take away a signed document
July 18th, 2022

Do you know how to make concessions in a negotiation?

Part of daily work and home life is full of negotiations. When not addressed effectively these can result in conflict, disputes, frustration, and in some cases anger. So, the question becomes how can you truly negotiate and make concessions in a negotiation while de-escalating the situation and working with another party? Four strategies are presented to help you making effective concessions in a negotiation at work or at home.

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