Valuations

Attorneys often suffer from “panicky client syndrome.” The client panics, the lawyer works double-time, and the client complains about the bill.

Many clients, especially difficult ones, use Friday afternoons to pawn their legal worries off onto their lawyers. And they use Monday mornings to vent about the weekend’s frustrations.

It’s no secret that property values throughout the nation have been depressed in recent years. Declining real estate values bring interesting problems to the valuation process because we haven’t experienced them in our recent past.

Property tax overvaluation problem

The Atlanta Journal-Constitution recently published a series of investigative articles reporting that properties in Georgia are over-valued by as much as 13 percent by county tax assessors because the assessors have not been equipped to handle rapidly declining markets. Other states likely have similar problems.

The Tax Court has ruled that a company could not modify the purchase price allocations it had agreed to in connection with two asset acquisitions.

In the case of Peco Foods Inc., et al. v. Commissioner (TC Memo 2012-18, Jan. 17, 2012), Peco Foods acquired two poultry processing plants: The Sebastopol plant in 1995 and the Canton plant in 1998. Both acquisitions were considered applicable asset acquisitions under Internal Revenue Code Section 1060.

A recent Tax Court decision presents a how-to list of steps to avoid when using a family limited partnership (FLP). Here is what happened.

In 1984, Dr. Paul Liljestrand transferred various real estate assets to a revocable trust, and his son Robert took over management of the real estate. Dr. Liljestrand was the sole beneficiary of the trust during his lifetime. Upon his death, the trust’s assets were to be distributed to trusts for his four children.