Restricted Reports and Estate Planning

[Terrel L. Shields]

his very question came up. The IRS review appraiser said restricted reports were not acceptable to IRS.

It's nice to be right for once in my life.

 

[Mark K]

Would you be willing to show a sample of your table?

Subject was a 45 ac. tract of ag land in an area being rapidly developed for industrial/business park use. Heirs were selling to settle estate.

 

[BRCJR]

Interesting, I don't see where a Restricted Appraisal is disallowed.

From the IRS :

• 4.1 Reporting Guidelines
  4.1 Reporting Guidelines Overview
• The primary objective of the report is to provide the ultimate decision maker with convincing and compelling support for the conclusions reached.
• Valuation reports should contain all the information necessary to ensure a clear understanding of the valuation analyses and demonstrate how conclusions were reached.
• Reporting Guidelines
• Report Contents
• The type of report depends on the needs of each case. No particular format applies to all cases. The (format) will vary depending on whether the case is agreed or unagreed and whether the report is being relied upon by the decision maker (e.g., taxpayer, team manager, appeals officer, attorney, court, etc.).
• Reports “should be well written, communicate the results and identify the information relied upon in the valuation process. The report should effectively communicate important thoughts, methods and reasoning, as well as identify the supporting documentation in a simple and concise manner, so that the user of the report can replicate the process followed by the Valuator.”
• Subject to the type of report being written, valuation reports should generally contain sufficient information relating to the items contained in Sections 2.2 (identifying), 2.3 (Documenting) and 2.4 (Analyzing), to insure consistency and quality of valuation reports issued by IRS Valuators.
• Reports written with respect to Section 2.6 2.8 (Review with recommended changes), should contain, at a minimum, those items in Sections 2.2 ( Identifying), 2.3 (Documenting) and 2.4 (Analyzing) necessary to support the revised assumptions, analyses, and/or conclusions of the Valuator.

 

[Terrel L. Shields]

• Subject to the type of report being written, valuation reports should generally contain sufficient information relating to the items contained in Sections 2.2 (identifying), 2.3 (Documenting) and 2.4 (Analyzing), to insure consistency and quality of valuation reports issued by IRS Valuators.
• Reports written with respect to Section 2.6 2.8 (Review with recommended changes), should contain, at a minimum, those items in Sections 2.2 ( Identifying), 2.3 (Documenting) and 2.4 (Analyzing) necessary to support the revised assumptions, analyses, and/or conclusions of the Valuator.

I would say they feel the analyses are insufficient within the report -

 

[Don Jones]

I would say they feel the analyses are insufficient within the report -

I reckon if the IRS review appraiser says they do not accept a restricted report and an appraiser does not want to believe the IRS authority about the matter you could just go ahead and submit a restircted report, tell them they are wrong in not accepting a restricted report and wrestle with them about it. I think it would be foolish to do so, and we all know what the outcome would be.

 

[BRCJR]

I reckon if the IRS review appraiser says they do not accept a restricted report and an appraiser does not want to believe the IRS authority about the matter you could just go ahead and submit a restircted report, tell them they are wrong in not accepting a restricted report and wrestle with them about it. I think it would be foolish to do so, and we all know what the outcome would be.

Ever know a review Appraiser to be wrong?

I am not saying I would subscribe to presenting a Restricted Appraisal but, in my research, I find no documentation stating a Restricted Appraisal is disallowed.

Someone please provide a link to such.

Is it a myth handed down like so many other "rules" Appraisers speak of?

 

[Tom D]

what is the $ amount that is estate irs tax free. i mostly do row homes, the only tax collected on these is for this state. only have done restricted.

 

[Terrel L. Shields]

what is the $ amount that is estate irs tax free. i mostly do row homes, the only tax collected on these is for this state. only have done restricted.

It is roughly 12 million - and that's cash and the value of property (real and personal)

Most estate appraisals are done for a step up basis to the heirs. from wiki

step-up in basis is the readjustment of the value of an appreciated asset for tax purposes upon inheritance. For example, supposed an investor bought a loft in 2000 for $300,000 and, when it was inherited by the beneficiary, it was worth $500,000. So, the beneficiary's tax basis would be $500,000. The beneficiary sells the loft for $750,000, which means that they will have to pay taxes on the difference between the selling price of $750,000 and their stepped-up basis of $500,000. In other words, they will pay taxes on the amount of $250,000.​

 

[jay trotta]

A Restricted Appraisal Report may only be used in situations where there are no intended users in addition to the client. It is also intended for situations in which a minimal disclosure of the support and rationale for the appraiser’s opinions and conclusions is appropriate

IMO, if you know it's for an Estate why would you use a Restricted format ?

 

[BRCJR]

A Restricted Appraisal Report may only be used in situations where there are no intended users in addition to the client. It is also intended for situations in which a minimal disclosure of the support and rationale for the appraiser’s opinions and conclusions is appropriate

IMO, if you know it's for an Estate why would you use a Restricted format ?

Then explain this please:

USPAP 2020-2021

Revisions to the Standards regarding reporting options and Comments in Standards Rules – The Board
adopted revisions to permit additional intended users besides the client for Restricted Appraisal Reports, as
long as the other intended users are named in the report (i.e., not merely identified “by type”). The second
adopted change for Restricted Appraisal Reports is a simplification of warning language that will no longer
include a reference to the appraiser’s workfile.