Several years ago Gibraltar Business Valuations was approached by an estate planning attorney to help in the valuation of a business enterprise where one of the owners unexpectantly died. This, by itself, is not unusual. What was unusual was the scope of the project. The company to be valued was a housing developer with 30 different subsidiaries, in multiple states. That, by itself is a significant task. Adding to the complexity of the project was an employee who did their best at keeping the accounting records, but was not an accountant. And when 30 intertwined businesses are involved, things can get fairly complex. In addition, some of the properties held were being foreclosed, while others were performing well.
The Internal Revenue Service looks at every single estate tax return that is filed. That does not mean that each one is audited. The more complex or the larger the size of the estate, the more likely the estate tax return is to be audited. By all indications, this estate tax return, of which the valuation would be a significant part, would be selected for audit. I, as well as the estate tax attorney, was convinced of this.
Gibraltar Business Valuations worked closely with the client to map-out the relationships of each subsidiary to the others in the group, and to make sure those relationships were correctly represented in the valuation report. We also worked with the real estate appraiser to make sure that each piece of real estate held was accounted for. Finally, we worked closely with the estate planning attorney to make sure we understood the impact of the rights and restrictions of the owners of each of the entities in the group. From all of this, Gibraltar Business Valuations was able to prepare a very detailed report, presenting our estimate of value and the reasoning for our conclusion.
When the letter from the IRS arrived in the mail, everyone expected it to be an audit. To everyone’s surprise, it was a closing letter. Meaning, the IRS had looked at the valuation and estate tax return, and determined that no audit would be performed. In fact, the attorney commented that the closing letter came more quickly than usual.
At Gibraltar Business Valuations we believe a well written, high quality and professionally prepared valuation report goes a long way to achieving a favorable outcome. And so it was in this case. When quality counts, choose Gibraltar Business Valuations.