Tax Strategies

IRS rules are complex and ever changing.

Through our almost 40 years in business, our independent tax valution services have withstood scrutiny by the IRS time & time again, resulting in favorable results for our clients.

Quist offers the following tax valuation services: 

Fractional Interest in Real Estate

A real estate fractional ownership interest, also called a tenancy in common interest, exists when two or more co-tenants each own a separate fractional share of undivided real property. Quist will establish the fair market value of real estate interests transferred during life and at death for federal tax purposes and determine the discounts applicable to undivided interests for minority and marketability considerations. Undivided interests are commonly contributed to individuals, Qualified Personal Residence Trusts, FLPs, or LLCs. They may also be among the assets included in a decedent’s estate.

Gift and Estate Tax Valuation

Quist will establish the fair market value of business interests transferred during life and at death for federal tax purposes.

When the owners of privately held companies or investment entities transfer interests in those entities to family members or others, they must disclose to the Internal Revenue Service the fair market value of the transferred interests. The taxpayer is responsible for properly documenting the value of the transferred interests. In many cases, this will require a valuation by an independent party. We have a deep and clear understanding of potential challenges by the IRS. Our expertise in this area has been honed over our 35+ years of experience so that you are protected.

Stock Based Compensation Valuations

Quist will establish the fair market value of common stock for purposes of setting option exercise prices following the rules under the Internal Revenue Code Section 409A. Section 409A contains detailed guidelines for determining the fair market value of the common stock of a privately held company and requires a “reasonable application” of a “reasonable valuation method.”

ASC 718 requires that equity-based employee compensation programs must be acknowledged as an expense. Stock appreciation rights (SARs) and stock options programs may be part of non-qualified deferred compensation plans which are regulated by Section 409A of the Internal Revenue Code. To comply with Section 409A, certain valuation procedures are required to determine the fair market value of the stock of a business that has awarded equity-based employee compensation.

S-Corporation Elections

Quist will establish the tax basis in corporate assets as of the date the company is converted from “C” to “S” tax status, to ensure that any taxes payable resulting from the sale of corporate assets during the subsequent ten-year period can be properly determined.

Following a conversion from a C to an S corporation, the shareholders have a ten-year period in which the double taxation provision remains in effect. A sale of any company asset during this ten-year period will generally result in double taxation to the extent of the asset’s built-in gain at the time of the conversion.

ESOP

The primary objective of an ESOP is to provide stock ownership interests to employees so that they have a vested interest in the successful operations of their companies. A qualified ESOP receives tax-favored treatment under the Internal Revenue Code. Because of the tax benefits, whenever an ESOP acquires employer’s stock from the corporation or from certain shareholders, the acquisition price must be less than or equal to “adequate consideration.” For employer securities that are not regularly traded, the Department of Labor defines adequate consideration as the fair market value determined by an appraiser independent of all parties to the transaction.

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Disclosure: IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written by us to be used, and cannot be used, (i) by any taxpayer for the purpose of avoiding tax penalties under the Internal Revenue Code or (ii) for promoting, marketing or recommending to another party any transaction or matter addressed herein.