By Jeff Faust, CVA, Director of Valuation Services
ASL Business Valuation Services

Recently, the IRS began pushing back on discounts used within estate and gift valuations, specifically the discount for lack of control (DLOC) and the discount for lack of marketability (DLOM), calling for lower discounts to be applied. Valuation discounts have always been critical in estate and gift valuations because they measure the restrictions on the ownership interest being valued. These discounts also can be used as a planning tool to help lower overall estate and gift taxes. As a result, the IRS reviews these discounts carefully and can push back on them. The DLOC is typically applied when the non-controlling interest is being valued and the DLOM is applied to account for the limited liquidity of the ownership interest. (more…)