What do appraisers need to do for estate planning? This is an honest question and one with many answers. The very fact is that one of the most important Machinery and Equipment Valuation tasks are typically estate and or gift appraisals and are often estate planning in one form or another away from an appraisal practice.
The IRS has a lot to strive for. Whenever a taxable asset * includes equipment, an equipment assessment is going to be required. The IRS lately clarified the phrase qualified appraisal as “USPAP-compliant judgment as interest; this, along with the original IRS crack-down on corrupt property appraisals, on the requirement for estates to use accredited appraisers Emphasized. The “one-sheet wonder” from an appliance dealer or auctioneer is over.
Two of the most important asset planning issues a Machinery and Equipment Appraisal can address during asset assessment are absorption and installation costs.
Many estates have a comparable number of devices. When is it appropriate to use absorption (AKA interruption) for valuation that will be used for estate planning?
Example: Valuation for a firm acting on behalf of an excluded family farming operation for tax purposes. The equipment to be valued included about 100 tractors. It was important to think about what the effect would be on the price of a private tractor on the market if it were issued purchasable with 100 identical tractors. By doing this, the equipment assessment saved the taxpayer a large amount of tax by using the interruption in a reasonable and properly documented manner.
When estates include an excluded amount of installed machinery, it is appropriate to include shipping, installation, and to include costs within the respective valuation, keeping in mind that these associated costs are often for installed machinery. Provide about half the price.
Example: Valuation with a business appraisal appraiser on the property including a recently upgraded factory. During this scenario, the valuation is typically in fair use for fair market value, which assumes that income supports values. During this case, however, the upgrade included a major design flaw – leading to an annual net operating loss – so that factory earnings did not support values. Rather than using a useful standard definition, the instrument appraiser has provided research and therefore has appropriate documentation to justify and support the useful definition.
These two examples are apparently a small sample of the exact property valuation issues that instrument apparels routinely encounter. Two prevailing concerns include the economic obsolescence factors of the recent CARB diesel emission regulations and are therefore financially affected by the dilemma of processing facilities. And in fact, the instrument evaluation for estates includes several other issues not directly related to the current circumstances.
Surprising enough, then, it seems that an equipment and machinery appraiser – while perhaps not routinely involved in estate planning because some lawyers and financial planners – are often actively involved in estate planning. And we can often provide a unique aspect to the estate planning community.