Valuation Round Table January 20, 2011 ©     By Michael GregoryMichael Gregory Consulting LLC     mg@mikegreg.com
Michael Gregory• 28 years at IRS as engineer valuer, manager,  operations team lead, controller, acting  assistant directo...
Disclaimer     The opinions presented here are those of Michael     Gregory. Michael Gregory does not represent the     IR...
Introduction• Discounts for Lack of Marketability• Subchapter S Adjustments• Observations Since Joining the Private Sector...
Discounts                   Michael Gregory Consulting LLCJanuary 20, 2012                                    5           ...
Background and Today’s Presentation              on DLOM’s• IRS Job Aide on Discount for Lack of  Marketability at irs.gov...
August 2011 Develops• Retirement July 31, 2011• Call from Eva Lang and Jim Hitchner• Call from the IRS• Research• IRS Offi...
Follow Up After Webinar• Webinar Published• Other Follow Up Webinars      – Lance Hall September 8, 2011 FMV Opinions     ...
Job Aide on DLOM at irs.gov• Download It• Read It• Key Points      – When      – What      – Why• How It May Be Useful    ...
IRS Job Aide Key Points• Length 111 to 116 Pages Depending on Source• Prepared and Reviewed by 5 ASA’s, 8 AVA/CVA’s  and 3...
IRS Job Aide Key Points Continued• Includes How IRS Valuers Should Approach Issue  As a Valuer• Provides Sample Report Lan...
Some Feedback From Three Webinars• 900 Participants• Key Points From the Webinars      – What Do You Rely Upon for DLOM?  ...
Job Aide Comments• Executive Summary      – Background      – Objective      – Approach      – Conclusion• Introduction• O...
Subchapter S Adjustments• Adjustment for a Subchapter S Corporation• Critique of Methods      – Fannon      – Grabowski   ...
Life In New Venture                        Michael Gregory Consulting LLCJanuary 20, 2012                                 ...
Observations Since Joining the                     Public Sector• Sources: BV Wire, NACVA Ambassador Quick  Read and Valua...
Observations Since Joining the               Public Sector Continued• John Paglia Pepperdine Private Capital  Markets     ...
Observations• IRS Job Aide on DLOM’s Worth Reading• Look at Why It Was Written and Audience• Nothing Personal – Strictly A...
Observations Continued• Subchapter S Adjustments• Comments on Major Methods• Private Sector Commentary                    ...
Book Coming Out in May• “How to Work with the IRS- Field Specialists  and Revenue Agents”• Note Business Valuers are withi...
Questions                   Michael Gregory Consulting LLCJanuary 20, 2012                                    21          ...
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Vrt board dlom 1 20-2012

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Valuation Round Table
San Francisco, CA
January 20, 2012

This presentation offers commentary on the DLOM, sub chapter S tax affecting, and examples

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Vrt board dlom 1 20-2012

  1. 1. Valuation Round Table January 20, 2011 © By Michael GregoryMichael Gregory Consulting LLC mg@mikegreg.com
  2. 2. Michael Gregory• 28 years at IRS as engineer valuer, manager, operations team lead, controller, acting assistant director, territory manager• Championed IRS DLOM Job Aide 2009, and Subchapter S Adjustments• Opened Michael Gregory Consulting LLC September 2011• mg@mikegreg.com 651-633-5311• ASA, CVA, MBA, Qualified Neutral, PE Michael Gregory Consulting LLCJanuary 20, 2012 2 www.mikegreg.com ©
  3. 3. 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 Consulting LLCJanuary 20, 2012 3 www.mikegreg.com ©
  4. 4. Introduction• Discounts for Lack of Marketability• Subchapter S Adjustments• Observations Since Joining the Private Sector Michael Gregory Consulting LLCJanuary 20, 2012 4 www.mikegreg.com ©
  5. 5. Discounts Michael Gregory Consulting LLCJanuary 20, 2012 5 www.mikegreg.com ©
  6. 6. Background and Today’s Presentation on DLOM’s• IRS Job Aide on Discount for Lack of Marketability at irs.gov Originally Prepared 9/2009 for IRS Valuers• August 2011 Developments• The Job Aide Public and Private• Comments on the Job Aide• Comments Since Entering Private Practice Regarding DLOM’s Michael Gregory Consulting LLCJanuary 20, 2012 6 www.mikegreg.com ©
  7. 7. August 2011 Develops• Retirement July 31, 2011• Call from Eva Lang and Jim Hitchner• Call from the IRS• Research• IRS Officially Publishes Job Aide August 22nd at 4:01 PM• Webinar August 23rd with John Hitchner and Jim Alerding Michael Gregory Consulting LLCJanuary 20, 2012 7 www.mikegreg.com ©
  8. 8. Follow Up After Webinar• Webinar Published• Other Follow Up Webinars – Lance Hall September 8, 2011 FMV Opinions Rebuts Job Aide – Chris Mercer September 15, 2011 QMDM• ASA BV Conference in Chicago October 10-12, 2011– DLOM Commentary – Espen Robak, John Finnerty, Ashok Abbott Michael Gregory Consulting LLCJanuary 20, 2012 8 www.mikegreg.com ©
  9. 9. Job Aide on DLOM at irs.gov• Download It• Read It• Key Points – When – What – Why• How It May Be Useful Michael Gregory Consulting LLCJanuary 20, 2012 9 www.mikegreg.com ©
  10. 10. IRS Job Aide Key Points• Length 111 to 116 Pages Depending on Source• Prepared and Reviewed by 5 ASA’s, 8 AVA/CVA’s and 3 CPA’s• IRS View on DLOM’s as of 2009• Identifies 33 Factors Deemed Important *• Includes 17 Initial IDR Items *• Includes How IRS Valuers Should Approach Issue As a Reviewer* Suggest Include In Your Report Michael Gregory Consulting LLCJanuary 20, 2012 10 www.mikegreg.com ©
  11. 11. IRS Job Aide Key Points Continued• Includes How IRS Valuers Should Approach Issue As a Valuer• Provides Sample Report Language *• Detailed Strengths and Weaknesses of Most Common Approaches *• Addresses Concerns with Fair Market Value Opinions Statistical Analysis• Provides Detailed Commentary on Other Methods* Suggest Include In Your Report Michael Gregory Consulting LLCJanuary 20, 2012 11 www.mikegreg.com ©
  12. 12. Some Feedback From Three Webinars• 900 Participants• Key Points From the Webinars – What Do You Rely Upon for DLOM? – How Long Do You Spend on DLOM? – How Useful and Will the Job Aide Change How You Approach DLOM’s? – Will DLOM Change Approach and Will It Make You Spend More Time DLOM’s in the Future? Michael Gregory Consulting LLCJanuary 20, 2012 12 www.mikegreg.com ©
  13. 13. Job Aide Comments• Executive Summary – Background – Objective – Approach – Conclusion• Introduction• Organization• Other Authors’ Observations Michael Gregory Consulting LLCJanuary 20, 2012 13 www.mikegreg.com ©
  14. 14. Subchapter S Adjustments• 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 Consulting LLCJanuary 20, 2012 14 www.mikegreg.com ©
  15. 15. Life In New Venture Michael Gregory Consulting LLCJanuary 20, 2012 15 www.mikegreg.com ©
  16. 16. Observations Since Joining the Public Sector• Sources: BV Wire, NACVA Ambassador Quick Read and Valuation Examiner, ASA BV Conference in Chicago, Networking with Valuers and Their Clients• John Finnerty Asian Option Model Big 4• Pluris Espen Robak Secondary Markets• Valuation Advisors Largest Data Base and Int’l• Ashok Abbott Liquidity Analysis from Public Markets Michael Gregory Consulting LLCJanuary 20, 2012 16 www.mikegreg.com ©
  17. 17. Observations Since Joining the Public Sector Continued• John Paglia Pepperdine Private Capital Markets – Revenue Successful Loans – $1 - $5 Mil 44% – $5 - $25 Mil 72% – >$25 Mil 90%• Question – Where Does Your Client Obtain Funds and Where Is FMV Source for Funds? Michael Gregory Consulting LLCJanuary 20, 2012 17 www.mikegreg.com ©
  18. 18. Observations• IRS Job Aide on DLOM’s Worth Reading• Look at Why It Was Written and Audience• Nothing Personal – Strictly Analytic• Multiple Approaches Recommended – Use Judgment and Document Rationale• Courts More Analytically Oriented• See Pro’s and Con’s of Methods and Choose Accordingly Michael Gregory Consulting LLCJanuary 20, 2012 18 www.mikegreg.com ©
  19. 19. Observations Continued• Subchapter S Adjustments• Comments on Major Methods• Private Sector Commentary Michael Gregory Consulting LLCJanuary 20, 2012 19 www.mikegreg.com ©
  20. 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 Consulting LLCJanuary 20, 2012 20 www.mikegreg.com ©
  21. 21. Questions Michael Gregory Consulting LLCJanuary 20, 2012 21 www.mikegreg.com ©

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