With the expiration of the Economic Growth and Tax Relief Reconciliation Act of 2001, the American Taxpayer and Relief Act (ATRA) was passed into law by President Obama on January 2, 2013 in an effort to avoid the fiscal cliff in the U.S. The passage of the ATRA included updates to the federal gift, estate, and generation-skipping transfer taxes. One update that particularly impacted taxpayers was the increase of the estate tax rate to 40% on assets above $5.25 million.
Given this rate increase, the importance of accurately valuing assets is paramount for high-net-worth individuals and estates. Because the burden of deriving the fair value of an estate’s assets is upon the taxpayer and the complex nature of federal estate tax laws, a qualified third-party valuation is often necessary.
One example of this issue is the valuation of employee stock options. Stock options are often included in the estates of high-net-worth individuals, but their value is not easily determined as opposed to non-employee stock options which are traded on exchanges. Independent appraisers who have the necessary expertise to apply technical valuation methodologies can assist the taxpayer in valuing employee stock options to ensure compliance with complex estate tax guidelines.
The IRS has set precedence in challenging certain cases and valuations; because of this, it is crucial that all assumptions and models can be defended in estate tax valuations. Greener Equity, Inc. is an independent, qualified valuation and advisory firm specializing in a range of valuations, including valuing interests in closely held businesses and related securities. The Company has experience delivering detailed and defendable reports that provide clients with both security and sound analysis from which estate and gift taxes can be derived. For further information, please visit http://greenerequity.com.