How to Write a Report for the IRS 2 of 3 Presentations for the Financial Consulting Group University April 30, 2012

1. For Financial Consulting Group University
Atlanta, GA, April 30, 2012
By Michael Gregory
Michael Gregory Consulting LLC

2.  Michael Gregory, Chief Manager, Michael
Gregory Consulting LLC since September
12, 2011
 Formerly IRS 28 Years as Engineer and
Valuer, Manager, Operations Team
Lead, Controller, Acting Assistant District
Director, Territory Manager
 ASA, AVA, MBA, PE, Qualified Neutral
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

3.  Risk Management, BV Review. and IRS
Assistance
 Alternative Dispute Resolution
 Strategic Planning
 Will Go Over Some Examples
 Could be of Service to You and Your Clients
 mg@mikegreg.com
 651-633-5311
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

4.  The opinions presented here are those of Michael
Gregory. Michael Gregory does not represent the
IRS. Any opinions presented in this seminar are
those of the author and do not represent an
official position of their current or previous
employers. This material is offered for
educational purposes only. The author and his
employer expressly disclaim any
liability, including incidental or consequential
damages, arising from the use of this material or
any errors or omissions that may be contained in
it.
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

5.  Professional Standards
 Appraiser Penalties
 Application of NACVA Standard
 Estate and Gift Classification
 Reviewer
 Your Approaches
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

6.  ASA
◦ ASA Candidate BV Report Review Checklist
 NACVA
◦ Comprehensive Business Valuation Reporting Checklist
for Valuation Engagements
 IBA
◦ IBA Professional Standards
 AICPA
◦ AICPA Statement on Standards for Valuation Services No
1
 IRS
◦ IRS Business Valuation Standards
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

7.  Qualified Appraiser
 Qualified Appraisal
 Proper Value
 Computation of Penalty
◦ Lesser of (1)the greater of 10% of the underpayment
of tax attributable to the misstatement or $1,000 or
(2) 125% of the gross income received by the
person from the preparation of the appraisal
◦ Exception “more likely than that standard”
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

8.  Comprehensive Business Valuation Reporting
Checklist for Valuation Engagements
 Published by the National Association of
Certified Valuation Analysts
 Key Points for Discussion
◦ Disclaimers and
◦ Seven Areas
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

9. ◦ 1 Report Fundamentals
◦ 2 Qualitative Foundations
◦ 3 Analytical Foundations
◦ 4 Valuation Approaches and Methods Considered
and Used
◦ 5 Valuation Adjustments
◦ 6 Representations of the Valuation Analyst
◦ 7 Conclusion of Value
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

10.  Date of Death
 Valuation Date
 Valuation
 Valuation Report
 Filing the Return with the Appraisal
 Classification in Cincinnati or Ogden
 Local Classification
 Assignment of E&G Tax Attorney
 Need for a Valuator
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

11.  Discounts
◦ DLOM (Discount for Lack of Marketability Job Aid
for IRS Professionals September 25, 2009)
◦ Minority Interest Discount
 Discount Rates (Build Up Method and CAPM)
 Cash Flow Adjustments
 Guideline Companies
◦ Misuse of Transactional Data Base Data
◦ Manipulation of the Data
 Not Following Standards – Fall Back USPAP
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

12.  Who Owns the Case?
 Who Manages the Case?
 What is the Role of the Valuator?
 Who Completes a Review?
 How Structured is the Review?
 How do You Ensure Quality Control?
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

13.  Professional Standards
 Appraiser Penalties
 Application of NACVA Standard
 Estate and Gift Classification
 Reviewer Concerns
 Your Approaches
© 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012

14. © 2012 Michael Gregory
Consulting LLC
www.mikegreg.com April 30, 2012