More than ever, taxpayers should handle tax valuations with caution -- and be certain not to raise the ire of the IRS.

With beefed-up enforcement capabilities, a string of Tax Court victories and a vigorous assault on undivided interest discounts, the Internal Revenue Service has recently been especially vigilant in policing discount issues.

Discounted assets can still pass muster with the IRS, though, as long as they are adequately supported. The best support, of course, is an independent valuation with a professional appraisal.

Pluris professionals have extensive experience valuing securities and other assets for tax purposes, and also keep up with the latest decisions from the Tax Court. It's not enough to know how the Internal Revenue Code and its regulations are being applied -- valuation professionals need to know how they are being applied today.

Fair Market Value
An asset's value is determined by what buyers are willing to pay for it.

U.S. Treasury regulations (§ 20.2031-1(b)) define "fair market value" as, "[T]he price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts."

The ideal for determining fair market value, then, is to review recent transactions involving similar assets. Since most assets that require tax valuations are illiquid, however, it is difficult to find this kind of empirical data.

Our proprietary LiquiStat™ database includes real-world data from transactions facilitated through the Restricted Securities Trading Network (RSTN). We believe this data is critical for determining valuations of illiquid assets and supporting such valuations in an audit or in court. This data, which is exclusive to Pluris, provides the most in-depth information available on real market transactions.

Mitigating Audit Risk
Whether you are filing an estate tax return (Form 706), a gift tax return (Form 709) or an income tax return, assets must be listed at fair market value. Listing assets at below fair market value is illegal and can subject you to tax penalties.

Aggressive discounts for illiquidity increase the probability of an audit. Conversely, backing the discount with a well-researched appraisal can help mitigate the risk of an audit.

Why Pluris?
Pluris is committed to providing clients with appraisals that determine the true fair market value of our clients' assets.

Our experience working both for the IRS and for taxpayers has given us invaluable insights that help us serve our clients. We are committed to stand by our opinions through audits, appeals and, if necessary, Tax Court.

For more information about our tax valuations, contact Pluris today.