Whether trying to entice a key executive in the form of equity based compensation, establishing the value as the basis for an S-Corporation conversion, or taking a charitable deduction on your income tax return, these arrangements are required to be reported at Fair Market Value. Fair Market Value for the closely held business generally requires a valuation as there is not a publicly traded price to reference. The importance of supporting any value by an arm’s length third party should not be taken lightly. For example, any challenge to a compensation deduction would not only include additional income taxes, but also the applicable payroll taxes along with penalties and interest from underreporting of compensation penalties.
According to IRC Section 170, the IRS requires the use of a qualified appraiser when performing tax related valuations. A qualified appraiser “is an individual who has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements, regularly performs appraisals for which the individual receives compensation, and meets such other requirements as may be prescribed in regulations or other guidance.”
The most common Income Tax Valuations that we perform include:
- Equity Compensation
- S-Corporation Conversions
- Charitable Giving
- Non-Compete Agreements
Valuation is our Focus
At Valuation Advisory Services, valuation is our focus, we have the qualifications and experience to perform any valuation that would be used for any income, estate, or gift tax purposes. Rest assured that our valuations have withstood challenges from the IRS and have been used directly in negotiations with IRS cases. Please contact us today if you would like peace of mind concerning your income tax valuation.