| Silver Linings in Economic Clouds - Lower Business Valuations for Estate Taxes |
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Several months ago the attorney for an estate asked us to prepare a business valuation. The owner had died suddenly leaving an early stage company without a creative and entrepreneurial leader. At his date of death the economic meltdown was under way. Our valuation found the company had lost significant value since the owner's death. The IRS allows estates to value assets either as of the date of death or six months later if the estate tax is less. The personal representative of the estate, the attorney, and other financial advisors agreed with our conclusion that filing as of the alternative date was appropriate because the business, stock investments and real estate had all diminished in value.
Result #1: Because of our analysis and collaboration with members of the team, the estate will pay less tax than it might have paid if it filed the tax return reporting date of death values. We have observed this result in several cases recently and in each case we produced savings for our clients. If you have considered gifting interests in a business or family LLC now is the time to achieve your goals and take advantage of the law to minimize estate taxes.
If you are buying, selling, valuing or would like to learn more about business transition and exit planning give Allan Vander Hamm, Principal, Business Valuation and Transition Services, a call to discuss the issues and the process. 425.289.7613 or avanderhamm@bpcpa.com |
Result #2: The company now has the necessary information to bid jobs with the correct amount of taxes. Further, they created a process for documenting tax reporting positions which will protect them from an assessment in the event of a Department of Revenue audit. 
