TAX, ESTATE & GIFT VALUATION

Defensible Business Valuations for Tax, Estate & Gift Planning

Independent business valuations for estate and gift tax matters, ownership transfers, succession planning, and other tax-sensitive transactions requiring well-supported conclusions of value.

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COMMON VALUATION NEEDS
When Do You Need a Tax, Estate & Gift Valuation?
Estate & Gift Tax Planning

Valuations for gifting, estate planning, estate tax reporting, and transfers of closely held business interests.

Ownership Transfers & Succession

Independent valuation support for family transfers, buy-sell arrangements, succession planning, and ownership restructuring.

Minority & Noncontrolling Interests

Valuation of partial ownership interests, including consideration of marketability, control, transfer restrictions, and relevant governing documents.

Tax-Sensitive Transactions

Independent valuation support for transactions where value may be scrutinized by taxing authorities, fiduciaries, advisors, or other stakeholders.

DEFENSIBLE VALUATION ANALYSIS
Valuations Designed to Withstand Scrutiny

Tax, estate, and gift valuations require more than applying a multiple to reported earnings. A well-supported valuation considers the specific valuation date, purpose and standard of value, ownership rights, financial performance, applicable valuation approaches, relevant market evidence, and adjustments supported by the facts and circumstances.

  • 1. Valuation Date, Purpose & Standard of Value: Analysis is developed for the specific effective date, intended use, applicable standard of value, and premise of value.
  • 2. Ownership Rights & Governing Documents: The subject interest, ownership rights, transfer restrictions, agreements, and other relevant governing provisions are considered.
  • 3. Financial Analysis & Normalization: Historical performance is reviewed for owner compensation, nonrecurring items, discretionary expenses, and other relevant adjustments.
  • 4. Appropriate Valuation Approaches: Income, market, and asset approaches are considered as appropriate based on the nature of the business, purpose of the valuation, and available evidence.
  • 5. Ownership-Level Adjustments & Reconciliation: DLOC, DLOM, and other ownership-level adjustments evaluated when applicable and supported, with methods and indications reconciled into a documented conclusion.
Grounded in Established Valuation Principles

Tax-related business valuations are developed with consideration of the applicable facts, circumstances, ownership rights, valuation date, and purpose of the assignment. For closely held business interests, established valuation guidance—including the factors identified in Revenue Ruling 59-60—provides an important framework for evaluating the nature of the business, financial condition, earning capacity, dividend-paying capacity, goodwill and intangible value, prior transactions, and relevant market evidence.

The objective is not to force a predetermined result, but to develop a conclusion that is supported by the available evidence, appropriate valuation methods, and clearly documented assumptions.

The Business Behind the Valuation

We evaluate historical financial performance, earning capacity, assets and liabilities, operating trends, owner involvement, industry conditions, and company-specific risks that influence value.

The Ownership Interest Matters

The rights attached to the interest being valued can materially affect value. We consider control, marketability, transfer restrictions, distribution rights, governing documents, and other relevant ownership characteristics.

Tax, Estate & Gift Valuation FAQs
A business valuation may be required when an ownership interest in a privately held company is transferred by gift, included in an estate, or otherwise reported for federal or state tax purposes. The valuation establishes the fair market value of the specific ownership interest as of the applicable valuation date and considers the company’s financial performance, assets, liabilities, ownership rights, market conditions, and other relevant factors.
Potentially. Depending on the specific ownership interest and facts of the assignment, valuation adjustments such as a discount for lack of control or a discount for lack of marketability may be considered. Any discount should be supported by the rights and restrictions associated with the interest, the company’s circumstances, available market evidence, and the applicable valuation guidance rather than applied as a standard percentage.
The required information depends on the company and ownership interest being valued, but commonly includes historical financial statements and tax returns, current financial information, ownership and capitalization records, governing agreements, details of the specific interest being transferred or valued, prior transactions in the company’s equity, and information about significant assets, liabilities, customers, management, and business risks. Additional documents may be requested when they are relevant to valuation discounts, control rights, transfer restrictions, or other assignment-specific issues.
The valuation should reflect the specific rights and characteristics of the ownership interest being valued. For a noncontrolling interest, the analysis may consider limitations on control, voting rights, distribution rights, transfer restrictions, liquidity, and other factors that could affect what a hypothetical buyer would pay. Where appropriate, these considerations may be reflected through supported valuation adjustments such as discounts for lack of control and lack of marketability.
Fair market value is generally the applicable standard for federal estate and gift tax purposes. It reflects the price at which the property would change hands between a hypothetical willing buyer and willing seller, neither being under compulsion to act and both having reasonable knowledge of the relevant facts. The analysis focuses on the specific ownership interest being valued as of the applicable valuation date.
The valuation date depends on the purpose of the assignment. For a gift, the relevant date is generally the date the ownership interest is transferred. For an estate, the date of death is typically used, although an alternate valuation date may apply in certain circumstances. Because value is determined as of a specific point in time, the analysis should reflect the financial information, market conditions, ownership structure, and facts known or reasonably knowable as of that date.
Yes. A valuation can be performed as of a historical date when the assignment requires a retrospective conclusion of value. In these engagements, BVA evaluates the company, ownership interest, financial information, market conditions, and other relevant facts as they existed or were reasonably knowable as of the historical valuation date, rather than relying on hindsight.
A defensible valuation is based on a clearly defined valuation date, ownership interest, and standard of value; reliable financial and operational information; appropriate valuation methods; and well-supported assumptions and adjustments. The report should also explain how factors such as control, marketability, transfer restrictions, capital structure, and company-specific risks were considered so that the conclusion can be understood and evaluated by the client, tax advisors, and other reviewers.
Explore All Private Business Valuation Services
 

View BVA’s full range of private business valuation, transaction, tax, litigation, ownership, SBA, and financial diligence services.
ROBS & Retirement-Plan Valuation
 

Independent valuation support for retirement-plan-owned business interests, ROBS compliance matters, plan transactions, distributions, and other ownership changes involving qualified retirement plans.
Quality of Earnings & Financial Due Diligence
 

Transaction-focused analysis of normalized EBITDA and SDE, Proof of Cash, working capital, and earnings quality.
Startup, Intangible & Financial Reporting Valuation
 

Independent valuation of startups, intellectual property, goodwill, promissory notes, and other intangible or financial assets for tax, transfer, planning, and reporting purposes.
Litigation, Disputes & Economic Damages
 

Independent valuation and financial analysis for shareholder disputes, divorce, lost profits, appraisal review, economic damages, and other contested matters.
Machinery, Equipment & Asset Valuation
 

Independent appraisal of machinery, vehicles, equipment, and other tangible assets when asset values affect partner buyouts, ownership transfers, purchase-price allocation, or internal transaction decisions.
Need a Tax, Estate or Gift Valuation?

Tell us what you are valuing, the purpose of the assignment, and your timing. We’ll help determine the appropriate scope, information requirements, and report format for your situation.

Schedule a Confidential Consultation
Need a Tax, Estate or Gift Valuation?

Tell us what you are valuing, the purpose of the assignment, and your timing. We’ll help determine the appropriate scope, information requirements, and report format for your situation.

Schedule a Confidential Consultation