Brookline Valuation Services, Inc. provides independent valuations of privately held businesses, ownership interests and other illiquid assets for federal gift-tax reporting, estate-tax reporting and estate settlement. We work with estate-planning attorneys, CPAs, executors, personal representatives, trustees, wealth advisers and families throughout Greater Boston, Massachusetts and New England.

Our analyses are prepared in accordance with accepted valuation methodology and the Uniform Standards of Professional Appraisal Practice (USPAP). Each engagement is designed to provide a clear, well-documented fair market value conclusion that can be understood by the client’s advisers and withstand scrutiny from the Internal Revenue Service, the Massachusetts Department of Revenue and other intended users.

Gift Tax Valuations and IRS Form 709

When an interest in a privately held company, limited liability company, partnership, family investment entity or real-estate holding company is transferred by gift, a qualified valuation may be needed to support the value reported on IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

Gift-tax valuations generally apply the fair market value standard under Internal Revenue Code Section 2512 and Treasury Regulation Sections 25.2512-1 and 25.2512-3. The analysis considers the rights and restrictions associated with the transferred interest, the company’s financial performance and outlook, relevant market evidence and the facts known or reasonably knowable as of the date of gift.

We value controlling and noncontrolling interests and, when supported by the facts, analyze discounts for lack of control and lack of marketability. Our reports are structured to assist the taxpayer and tax adviser in preparing a complete and supportable filing, including the information relevant to adequate disclosure of the transfer.

Estate Tax and Date-of-Death Valuations

For estate-tax and estate-settlement purposes, closely held business interests generally must be valued as of the owner’s date of death. These valuations may support IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Massachusetts Form M-706, fiduciary accounting, beneficiary distributions, buyouts, sales and other estate-administration decisions.

Our date-of-death valuations apply the fair market value principles of Internal Revenue Code Section 2031 and the applicable Treasury Regulations. When the estate elects and qualifies to use an alternate valuation date under Internal Revenue Code Section 2032, we can prepare the corresponding analysis in coordination with the estate’s legal and tax advisers.

Estate Settlement and Basis Reporting

A business valuation can be important even when no federal estate-tax return is required. Executors, personal representatives, trustees and beneficiaries may need an independent value to establish tax basis, allocate assets, negotiate distributions, redeem an ownership interest or document a subsequent sale.

When applicable, our work can support basis-consistency reporting associated with IRS Form 8971 and Schedule A. We coordinate with the estate’s attorney and CPA so the valuation date, ownership interest, standard of value and intended use are properly defined before the analysis begins.

Interests and Entities We Value

• Closely held corporations and S corporations
• Limited liability companies and partnerships
• Family limited partnerships and family investment entities
• Real-estate holding companies
• Investment holding companies and special-purpose vehicles
• Venture capital, private equity and fund interests
• Controlling and noncontrolling ownership interests
• Operating businesses and entities holding non-operating assets

Valuation Issues We Address

• Date-of-gift, date-of-death and alternate-valuation-date analyses
• Historical and retrospective valuation dates
• Discounts for lack of control and lack of marketability
• Voting, distribution, redemption and transfer rights
• Buy-sell agreements and restrictions on transferability
• Key-person risk and customer or supplier concentration
• Non-operating assets, excess cash and shareholder loans
• Embedded capital-gains tax and other entity-specific considerations

Specialized Valuation Topics

Valuation of LLC and Partnership Interests — We value the specific member or partner interest, considering its economic rights, governing agreement, underlying assets, distributions, and transfer provisions.

Discounts for Lack of Control and Marketability — We assess whether DLOC or DLOM is warranted, the level of value indicated by the valuation methods, and the facts that support any adjustment without double counting.

Information Commonly Needed

The information required depends on the entity and purpose of the valuation, but typically includes governing documents, capitalization records, recent tax returns and financial statements, management forecasts, transaction history, prior appraisals, buy-sell agreements and details concerning the specific interest transferred or included in the estate. For retrospective valuations, we focus on information that existed or was reasonably knowable as of the valuation date.

Experienced, Independent Valuation Advice

Mark Shifrin has been an Accredited Senior Appraiser in Business Valuation since 2007 and has more than 25 years of valuation experience. Clients work directly with Mark throughout the engagement, from defining the assignment and requesting information through reviewing the facts and completing the report.

If you need a valuation for Form 709, Form 706, Massachusetts Form M-706, estate settlement, basis reporting or a related planning matter, please contact Brookline Valuation Services to discuss the ownership interest, valuation date, filing requirements and timing.

Request a Valuation Consultation

To discuss a Form 709 or Form 706 appraisal, share the entity type, valuation date and filing deadline if known. Please do not include confidential financial records in this initial message.