IRS Regulations

What The IRS Says About Business Appraisals

The IRS Tax Requirement

For certain tax filing purposes, the IRS requires that an appraisal be completed by a “Qualified Appraiser” as defined in IRS Regulations.

The Definition Of A “Qualified Appraiser”

The regulations state a “Qualified Appraiser” is one who has earned an appraisal designation from a professional appraisal organization, has the appropriate education and experience and performs appraisals on a regular basis.

Pertinent IRS Bulletins

The IRS has the concept of a “Qualified Appraiser” defined in their regulations: Internal Revenue Bulletin 2006-46 and Notice 2006-96 regarding Section 170(f)(11) of the Internal Revenue Code, relating to the new definitions of “qualified appraisal” and “qualified appraiser.”

The Term “Qualified Appraisal”
Section 170(f)(11)(E)(i) provides that the term “qualified appraisal” means an appraisal that is (1) treated as a qualified appraisal under regulations or other guidance prescribed by the Secretary, and (2) conducted by a qualified appraiser in accordance with generally accepted appraisal standards and any regulations or other guidance prescribed by the Secretary.

The Term “Qualified Appraiser”
Section 170(f)(11)(E)(ii) provides that the term “qualified appraiser” means an individual who (1) has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in regulations prescribed by the Secretary, (2) regularly performs appraisals for which the individual receives compensation, and (3) meets such other requirements as may be prescribed by the Secretary in regulations or other guidance.

Property Qualification
Section 170(f)(11)(E)(iii) further provides that an individual will not be treated as a qualified appraiser unless that individual (1) demonstrates verifiable education and experience in valuing the type of property subject to the appraisal, and (2) has not been prohibited from practicing before the Internal Revenue Service by the Secretary under S 330(c) of Title 31 of the United States Code at any time during the 3-year period ending on the date of the appraisal.

Have questions about the IRS regulations? Call MBA at 1-978-975-7600.  We are an IRS qualified business appraiser.

 

 

Of Interest To Accountants

IRS Compliance
• MBA produces accurate valuations that meet and exceed IRS requirements and acceptance, including the requirements for a “Qualified Appraisal” and “Qualified Appraiser” as stated in IRS regulations.

Confidentiality
• Your client’s confidentiality is assured. MBA abides by the highest standards. We appreciate that even the fact that an appraisal is being done is confidential.

Value Added
• This is a value added service that accountants can offer their clients and thereby avoid any potential conflicts of interest. As MBA does only business appraisals, accounts have no risk of losing the client for other services such as tax and audit services.

Of Interest To Attorneys

Unimpeachable
• MBA produces unimpeachable formal appraisal reports that stand up to the toughest cross-examination.

Unambiguous
• The Value is unambiguous, and fully explained, supported and documented.

Minority Discounts
• MBA fully understands, applies and explains the concepts of minority discounts and personal goodwill.

Standard of Value
• MBA works with the attorney to determine the appropriate Standard of Value for the given situation and forum.