The recent United States Tax Court opinion in the case of Estate of Scott M. Hoenshied v. Commissioner of Internal Revenue sheds light on the significance of a professional certification when conducting business valuations, especially in the context of litigation.
The case involved a charitable contribution of shares in a closely held corporation where the appraiser lacked certification from a professional organization and made several errors in the preparation of the valuation.
According to the Tax Court, a qualified appraiser must hold an appraisal designation from a recognized professional appraiser organization, regularly perform appraisals for compensation and meet other requirements prescribed in the regulations. In this case, the appraiser failed to meet these criteria and made numerous errors in the valuation report, leading to a disallowance of the significant tax deduction.
Key Takeaways:
- Certification: The case highlights the importance of appraiser certification from recognized professional organizations like the National Association of Certified Valuators and Analysts (NACVA) or the American Institute of Certified Public Accountants (AICPA). Certification serves as a mark of credibility and competence in the eyes of the court and enhances the acceptance of appraisals in litigation.
- Education: Appraisers should complete ongoing education and training in the appraisal field to stay on top of industry trends and best practices. Continuing education not only reinforces an appraiser’s expertise but also instills confidence in the court and opposing counsel regarding the validity of their work.
- Compliance: Appraisers must adhere to prescribed standards and guidelines in conducting valuations and preparing appraisal reports. Failure to comply with regulatory requirements and include essential information in the appraisal report can undermine its credibility and acceptance.
Schneider Downs is committed to upholding professional standards and delivering high-quality valuation services. We are proud that our team is composed of certified individuals recognized by reputable professional appraiser organizations like NACVA and the AICPA. Our certified appraisers undergo rigorous training, maintain active participation in continuing education programs and adhere to industry best practices to ensure the quality and integrity of our valuation services.
For more information about our business valuation and other advisory services, contact Steve Thimons at 412.697.5281 or [email protected], or Adam Goode at 412.697.5411 or [email protected].
About Schneider Downs Tax Services
Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.
To learn more, visit our dedicated Tax Services page.
