In the case of the estate of Gallagher v. Commissioner, the decedent owned 15 percent in a private Subchapter S corporation that held various newspaper assets. When she died in July 1994, her estate valued her 15 percent share at $35 million based on an appraisal by its CEO, but the Internal Revenue Service (IRS) said it was worth closer to $50 million. At trial before the Tax Court, both sides enlisted new appraisers and closed the gap slightly: $28 million for the taxpayer versus $41 million for the IRS. In particular, they disputed four broad aspects of the valuation.
To read this article and the full text of our Valuation Services Group Bulletin, click here.