FCG Valuation Case E-Flash Estate of Jensen v. Commissioner

Authored by John Walker and Chris D. Treharne, ASA, MCBA, BVAL of Gibraltar Business Appraisals, Inc. a member firm of FCG Issue 12:10

Estate of Marie J. Jensen, Deceased, Virginia E. Maurer, Executrix, Petitioner v. Commissioner of Internal Revenue, Respondent
T.C. Memo. 2010-182, Docket No. 25681-08, Filed August 10, 2010.

The Tax Court considered the amount of discount allowable for built-in long term capital gains tax when calculating the value of an estate’s controlling, 82-percent interest in a closely-held C corporation owning real estate.

The Takeaway
Reversing its positions in Eisenberg, Estate of Dunn, and Estate of Jelke, the Tax Court allowed Jensen’s built-in, long term capital gains tax to be deducted dollar-for-dollar. A less apparent fact associated with the case: The taxpayer and IRS stipulated that the value of the 82-percent, controlling interest was subject to a 5% discount for lack of marketability from its pro rata share of tangible net asset value.

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