Fair value forum 8 am 1 20-2012

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Presentation to the Fair Value Forum …

Presentation to the Fair Value Forum
San Francisco, CA
January 20, 2012

This presentation offers a quick overview on the IRS, 409A, DLOM, and subchapter S tax affecting with examples

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  • 1. Fair Value Forum January 20, 2012 © Michael GregoryMichael Gregory Consulting LLC www.mikegreg.com
  • 2. Presenter• Michael Gregory, Michael Gregory Consulting LLC since September 2011• Formerly IRS 28 Years as Engineer and Valuer, Manager, Operations Team Lead, Controller, Acting Assistant District Director, Territory Manager• ASA, CVA, MBA, PE, Qualified Neutral, PE• mg@mikegreg.com 651-633-5311 Michael Gregory Consutling LLCJanuary 20, 2012 2 www.mikegreg.com ©
  • 3. Michael Gregory Consulting LLC• Risk Management• Alternative Dispute Resolution• Strategic Planning• Could be of Service to You and Your Clients Michael Gregory Consutling LLCJanuary 20, 2012 3 www.mikegreg.com ©
  • 4. Disclaimer 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. Michael Gregory Consutling LLCJanuary 20, 2012 4 www.mikegreg.com ©
  • 5. Discussion Today• Quick Overview on IRS• Topics of Interest – 409A – DLOM – Tax Affecting Subchapter S Corporation Valuations• Some Stories with New Venture Michael Gregory Consutling LLCJanuary 20, 2012 5 www.mikegreg.com ©
  • 6. IRS• Eleven Divisions• Compliance – Four Divisions• Appeals• Counsel – IRS and DOJ Tax Litigation Division• Of Your Primary Interest as Valuers – LB&I – SBSE – TEGE Michael Gregory Consutling LLCJanuary 20, 2012 6 www.mikegreg.com ©
  • 7. IRS.gov• Businesses• Starting a Business• Operating a Business• Closing a Business• Employer ID Numbers• Small Business Events• Industry Professions• Audit Technique Guides – Aerospace to Wine Michael Gregory Consutling LLCJanuary 20, 2012 7 www.mikegreg.com ©
  • 8. Large Business and International• Six Industries and One Support Function• CTM, FS, HMT, NRC, RFPH, GHW,• Field Specialists – Engineering and Valuation – Employment Tax – Computer Audit Specialists – Financial Products• Counsel Michael Gregory Consutling LLCJanuary 20, 2012 8 www.mikegreg.com ©
  • 9. Engineering and Valuation• Internal Consultants to All Divisions• Four Territory Managers• 32 Managers• 320 Technical Employees• Ron Cerruti Territory Manager West Coast• Know Who Your Local Valuers and Managers Are• Invite Them to Speak with You Michael Gregory Consutling LLCJanuary 20, 2012 9 www.mikegreg.com ©
  • 10. Small Business and Self Employed• Examination – General – Estate and Gift • Classification Process • Owner• Collection• Counsel Michael Gregory Consutling LLCJanuary 20, 2012 10 www.mikegreg.com ©
  • 11. Tax Exempt and Governmental Entities• ESOP’s• Related for Profit Entities• Gifts in Kind• Services Provided• Reasonable Compensation Michael Gregory Consutling LLCJanuary 20, 2012 11 www.mikegreg.com ©
  • 12. Appeals• Case Closes Out of Examination Unagreed and Goes to the Internal IRS Appeals Divsions• Goal to Settle Cases• 85% Target• Independent• Ex Parte Rules Michael Gregory Consutling LLCJanuary 20, 2012 12 www.mikegreg.com ©
  • 13. Counsel• IRS Office of Chief Counsel – Appointed by the President • Operations • Technical – All Non Litigation Work (legislative, regulation, interpretation) – Corporate – International – Technical Advice• IRS Division Counsel• IRS Special Trial Counsel• DOJ Tax Litigation Division Michael Gregory Consutling LLCJanuary 20, 2012 13 www.mikegreg.com ©
  • 14. Enough On Background Let’s Move on to the Fun Stuff Michael Gregory Consutling LLCJanuary 20, 2012 14 www.mikegreg.com ©
  • 15. 409A• Approach• Auditors• Valuation• AICPA Guide now Under Revision Draft: See Old and New Draft• Training• Key Pockets Michael Gregory Consutling LLCJanuary 20, 2012 15 www.mikegreg.com ©
  • 16. Discount for Lack of Marketability• Job Aide Discounts for Lack of Marketability – History – Purpose – Impact• Follow Up• Pluris, FMV, Valuation Advisors, John Finnerty, Ashok Abbott• Judges Conference Michael Gregory Consutling LLCJanuary 20, 2012 16 www.mikegreg.com ©
  • 17. Tax Affecting Subchapter S Corporations• Adjustment for a Subchapter S Corporation• Critique of Methods – Fannon – Grabowski – Mercer – Treharne – Van Vleet• Reasonableness at IRS• Estate and Gift vs Valuer Commentary Michael Gregory Consutling LLCJanuary 20, 2012 17 www.mikegreg.com ©
  • 18. Discuss Some Examples• SBSE Examination Case with E&G on Exam• SBSE Examination Case with Counsel• SBSE Case at Appeals• LB&I 409A• LB&I Stock Options and Stock Valuations• LB&I Purchase Price Allocations• 6695A Appraiser Penalties Michael Gregory Consutling LLCJanuary 20, 2012 18 www.mikegreg.com ©
  • 19. Important Take Away Information• Know Who Your Working with at the IRS• Understand the Role of Participants• Seek to Understand Interests• Do Not Be Afraid to Ask Questions• Consider Options – Ask for a Valuer – Ask to Elevate in Management as a Neutral Party Given Ownership of the Issue by the RA or ETA Michael Gregory Consutling LLCJanuary 20, 2012 19 www.mikegreg.com ©
  • 20. Book Coming Out in May• “How to Work with the IRS – Field Specialists and Revenue Agents• Note Business Valuers are within Field Specialists• Analogy with International Examiners and Economists Michael Gregory Consutling LLCJanuary 20, 2012 20 www.mikegreg.com ©
  • 21. What Are Your Thoughts and Questions Michael Gregory Consutling LLCJanuary 20, 2012 21 www.mikegreg.com ©