Thoughts and Insights by Michael Gregory

IRS Updates & Help

three hands pointing fingers at three other hands
September 6th, 2022

Business valuers, the IRS, and conflict resolution – Part 2 - Top issues of disagreement

This is part 2 of a 6 part series. Conflicts and disputes in the area of business valuation with the IRS may be expected given the subjective nature of this topic. Part 1 set the stage introducing the concepts of mediation, business valuer bias, steps to overcome bias, federal court rules, the likelihood of litigation, how most appraisers never know their appraisal is being audited by the IRS, and potential penalties on appraisers. This Part 2 commentary focuses on the most commonly adjusted areas by IRS valuers and what valuers can do to reduce the probability of an audit technically.

A C-clamp squeezing a wallet with dollar bills in it
June 27th, 2022

Is the IRS Job Aid on Reasonable Compensation still relevant?

The IRS valuers identified reasonable compensation as one of the top issues for audit. Differences of opinion by valuers in the private sector and IRS valuers could lead to conflict and disputes on examination, leading to Appeals, and potentially to litigation. This commentary defines reasonable compensation, introduces the IRS Job Aid and Appendix, provides links to some recent IRS papers related to reasonable compensation, introduces how various levels at the IRS look at the issue, provides links to relevant court cases and key factors for consideration from those court cases, and provides a source for contemporary commentary on this topic.

A mansion with many rooms and a big garage
August 24th, 2020

This is how to interact with an IRS Estate and Gift Tax Attorney on a valuation issue

It was my pleasure to be interviewed by Melissa Gragg, the Managing Partner at Bridge Valuation Partners, LLC, via her pod cast on this topic. For those not interested in listening to a nearly 90 minute podcast with lots of details, here is a much shorter seven minute version sound bites on LinkedIn. However, for those looking for a quick read on some of the key points this may help. We discussed over a dozen questions and additional follow up questions, but here are some of the key points.

Man in suit pointing at clear screen where the button he is pointing at says audit
August 7th, 2020

Begin an Audit with the IRS with Collaboration

When you think of collaboration quite likely the IRS does not come to mind. Rather when you hear the term IRS you are not thinking of working together. Instead the thought of an IRS audit likely brings forth thoughts of anxiety, I don’t have time for this, why me and now what? With that in mind I thought explaining some basic tips after receiving an audit letter from the IRS may help. Especially as these tips relate to The Collaboration Effect. After all the IRS are people too.

IRS symbol with IRS - blue background and white symbol and lettering
August 3rd, 2020

IRS, Business Valuers, Adjustments and Preventative Approaches

On July 1, 2020 it was my pleasure to be interviewed by Melissa Gragg, CVA, MAFF, CDFA and Managing Partner at Bridge Valuation Partners, LLC. This 84 minute podcast is packed many ideas of how to avoid and what to do if audited by the IRS on an estate or gift tax return. For business valuers this commentary focuses on the most common adjustments by IRS Business Valuers and what you might want to consider to both avoid an audit and what to do if audited. What does this have to do with The Collaboration Effect® you may ask. Read on. Clearly not everything in that podcast can be presented here, but some of the key highlights can be. The purpose of this commentary is to focus on one of the questions from that podcast. That is: What are the most common adjustments by IRS Business Valuers.

Tax type papers, coffee cup and calculator on a destk
January 6th, 2020

Token Concessions and Counteroffers in Negotiations with the IRS on Business Valuations

When you think of negotiations, do you think about the IRS? With all of the negatives on TV about the big bad IRS it is important to realize they are people with a job to do, and they are indeed people. As with any organization there can be zealots that are over the top. Depending on your experiences you may have met one, and that person may have set your bias on the IRS. However, the vast majority of IRS examiners are reasonable people. if you are open to resolving issues with the IRS, here are two key elements to consider. Before proceeding, reflect and remember your ethical principles and values to be true to yourself. If what you want to do is do the right thing, do what it takes and have closure these ideas can help you with the IRS. Let’s look at token concessions first.

golf clubs set up at the practice range
August 19th, 2019

What questions should you ask when preparing for a valuation discussion with the IRS?

This article addresses how to prepare and what questions to ask when involved in a facilitation, negotiation or mediation with another party. The focus here is on a business valuation issue with the IRS.  Preparation is key. Conducting a mock interaction ahead of time can be extremely valuable. 

A hot tub
April 1st, 2019

Hot Tubing with the IRS in U.S. Tax Court on Valuation Cases

Over the last few years the U.S. Tax Court has been experimenting with “hot tubbing” experts [concurrent witness testimony] on cases so that the U.S. Tax Court Judge can informally sit with the experts and ask questions. The commentary that follows considers an application of The Collaboration Effect TM to this situation.

Puzzle pieces coming together with puzzle piece names of goal, vision, strategy, planning and process
January 7th, 2019

What is the best process when it comes to a negotiation?

Process matters.  Are you a “win all” type negotiator implying win everything at all costs?  That is, you win and they lose.  By contrast, are you a win-win negotiator oriented towards expanding the pie negotiator so that both you and the other party can both do better?  That is focusing on mutual gains.

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