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

1. Fair Value Forum
January 20, 2012 ©
Michael Gregory
Michael 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
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3. Michael Gregory Consulting LLC
• Risk Management
• Alternative Dispute Resolution
• Strategic Planning
• Could be of Service to You and Your Clients
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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.
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5. Discussion Today
• Quick Overview on IRS
• Topics of Interest
– 409A
– DLOM
– Tax Affecting Subchapter S Corporation Valuations
• Some Stories with New Venture
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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
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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
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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
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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
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10. Small Business and Self Employed
• Examination
– General
– Estate and Gift
• Classification Process
• Owner
• Collection
• Counsel
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11. Tax Exempt and Governmental Entities
• ESOP’s
• Related for Profit Entities
• Gifts in Kind
• Services Provided
• Reasonable Compensation
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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
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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
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14. Enough On Background
Let’s Move on to the Fun Stuff
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15. 409A
• Approach
• Auditors
• Valuation
• AICPA Guide now Under Revision Draft: See
Old and New Draft
• Training
• Key Pockets
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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
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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
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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
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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
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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
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21. What Are Your Thoughts and
Questions
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