Estate and gift tax valuations are generally performed under the fair market value standard, as defined for federal tax purposes. This standard reflects the price at which property would change hands between a hypothetical willing buyer and willing seller, each having reasonable knowledge of relevant facts and neither being under compulsion to act.

Applying this standard requires careful consideration of:

• The nature of the business and its operating history
• The economic outlook of the industry and general market conditions
• The financial condition and earning capacity of the enterprise
• The rights and limitations associated with the ownership interest

Each of these factors contributes to a comprehensive determination of value consistent with applicable guidance.

We assist in interpreting and applying these provisions in a manner that is:

• Consistent with the language and intent of the agreement
• Aligned with recognized valuation standards
• Adaptable to the current economic and operational realities of the business

Where agreements are silent or ambiguous, we provide structured analyses that support reasonable and defensible conclusions.

Valuations for tax reporting must be grounded in recognized methodologies and supported by reliable data. We apply income, market, and, where appropriate, asset-based approaches, selecting and weighting methods based on the business's characteristics and the available information.

Key elements of our analyses include:

• Development of normalized financial results to reflect ongoing operations
• Evaluation of projected performance and associated risks
• Selection of appropriate capitalization or discount rates
• Consideration of market-based evidence, including comparable companies and transactions

All assumptions are clearly articulated and supported to ensure transparency and defensibility.

Closely held business interests often have characteristics that differ from those of publicly traded securities, including limited control and restricted marketability. Where appropriate, these factors are evaluated in the context of the fair market value standard.

Our analyses address:

• The level of control associated with the interest
• The impact of transfer restrictions or other limitations
• The appropriateness and support for any adjustments related to control or marketability

These considerations are applied carefully to avoid unsupported or duplicative adjustments.

Valuations performed for planning purposes differ from those prepared at the time of a triggering event. Advance valuations can help establish expectations, inform agreement design, and reduce the likelihood of future conflict.

At the time of a triggering event, however, the valuation must reflect current conditions, updated financial information, and the specific facts surrounding the transition.

We assist clients in both contexts:

• Pre-event planning, to support the development or refinement of buy–sell agreements
• Event-driven valuations, to determine value when a transfer is required under the terms of the agreement

In the event of an IRS review, the quality of documentation is critical. Reports must clearly present the analytical process, support all key inputs, and demonstrate consistency with established valuation guidance.

Our valuation reports are prepared with a focus on:

• Clear explanation of methodologies and conclusions
• Comprehensive support for assumptions and adjustments
• Organization and presentation consistent with professional standards
• Readiness for review by taxing authorities and advisors

A well-prepared valuation does more than satisfy a filing requirement; it strengthens the taxpayer’s position. Providing a clear, well-supported determination of value reduces ambiguity and helps mitigate the risk of challenge.

We work closely with clients and their advisors to ensure that valuation conclusions align with reporting needs and are supported by a rigorous analytical foundation.