You cannot and should not have undertaken this assignment since you are not certified (did not say smart enough or other) to complete a discounted cash flow on properties with more than 4 elements. Since each property has a separate HBU, and each can be built on, while you can bundle a report, you have to provide a separate value for each lot. Just like in residential properties when you have two lots, one free and clear and the other with the home on it, a separate value for each must be presented.

Four years for returns; three years for refunds and ten years for issues where IRS can allege (charge) criminal tax avoidance. Appraiser studies sketchy at best but depending on what specifically who knows? The remainder are interesting. In any event, if more than 4 years lapsed apparently IRS saw no red flags. Good job!

Most were small partnerships among friends or family’s, for taxes. much of the info came from the accounts studies distributed among appraisers, some came from sales IN partnerships where timing required a temporary partner, or family member to substitute until the ultimate sale. I found some of these contradictory, another friend paid a premium, and in another a family member screwed a relative.

Most of these situations occurred before those above cited studies. I noted in the one those PDF; it stated that these situations MAY CHANGE. Thanks for your concern. The statutes have expired and shield me!!

I hope those are purely entity ownership interests and not TICs Don. Don’t take my word or site info for it. Take the governments. https://www.irs.gov/pub/irs-utl/dlom.pdf

TICS are usually limited to partition costs ‘discounts’. Any fractional ownership interest discounts involving TICs that exceed partition costs are not usually supportable (as in as close to ‘never’ as we can ever come to in this profession).

Entity interests deal in DLOM and DLOL DLOC marketable and non-marketable. Beware, non-marketable (unregistered/restricted stocks) are no longer required to be held for two years (6 months is the minimum conditional resale limit now) so any PWC REIT sourced discount rates or Restricted Stock Studies developed prior to the time the period was reduced from 2 years to 1/2 year are now invalid. https://www.sec.gov/reportspubs/investor-publications/investorpubsrule144htm.html

Aside from the fact that a 1/2 billion REIT bears no resemblance to most C&I property sold in American main street markets as opposed to Wall Street markets.

My worst experience after accepting an assignment for a small office building was in testifying for a fee half as large as the business valuators. The Judge denied his testimony because he did not develop a cap rate.

I collected my miserly fee in front, We discussed fees waiting to testify, he went first.

I regularly discount values of multiple ownerships. Anything less than a CONTROLLING interest is awkward to sell.

However limited partnerships sell (to a different name LLC) while retaining some of the old partners (Who Knew). Often those were internal sales, NOT FMV. How do you figure???

Don’t use a form, and if you do put the value on a front page transmittal letter and not to 1004 or?? form

Absolutely right. I think a lot of this stems from the desire to convert Business Valuators to USPAP compliant ‘appraisers’ and licensed real estate appraisers to ‘valuators’. Im pretty sure AICPA must have put their foot down about calling us ‘business valuators.’

It’s common in tax practice appraising (usually by accountants; and sometimes by probate referees), to list hundreds of individual property values owned by Entities (as individuals). They may include separate summaries (short paragraphs) showing individual “market derived” net income, but they are just as likely to take entire categories (say hotels; or recreation properties-campgrounds, travel centers, etc) and simply ‘declare’ that Wall Street investors for the asset-class demand a return rate of “x” and in order to achieve that return rate the ‘market income’ must be “y”. 180 degrees opposite techniques of traditional real estate appraisals valuing the same individual assets.

This was in the works and anticipated back in 2009-11, and also when (some in) AI tried to get AB624 through (successfully replaced by SB70) in my state. It’s also what leads to the vague and ambiguous scope of work statements being used to circumvent specific aspects of standards that do not lend themselves to 30-second analyses.

We’ve gone down so far on that slippery slope I don’t know if we will ever make it back to solid principles, practices and meaningful ethics becoming the norm again.

I’ve never seen restricted reports that meet minimum IRS requirements. Of course, it will take about 2 to 3 years for the audit to decide if the data is summarized or stated. TAF can change the names or report types all they want. IRS still requires information to be summarized rather than stated. I haven’t checked all the most recent regs (Treasury Regs; IRC, IRR, Commissioner’s PLRs & Court Cases) on this specific issue yet but those I did check still hadn’t been updated to accept restricted reports. IRS usually updates their regs DVDs about every six months.

I have seen what would otherwise be restricted reports inserted as separate sections within larger reports covering multiple properties and when done right it meets their requirements. My hope is that your work was incorporated into your clients CPAs or tax attorney’s larger report.

Beware of discounting with IRS. In the instance, you cited it would reduce the deduction so they would not likely challenge it. …BUT, Just for fun type “DLOM MFFord” into your search browser.
Particular attention should be paid (by appraisers anyway) to knowing whether they are dealing with entity interests or TICs. Recommend leaving entity interests to the accountants and CPAs (or trained business valuators). TICs vary from state to state based on your states rights to partition.

Applying ‘typical’ Entity DLOMs to TICs is a surefire recipe for disaster. There is no safe haven discount amount.

Also, I copied the entire IRS non-cash charitable donation procedures powerpoint presentation which can be found at http://www.mfford.com (under non-cash charitable donations tabs). The area to pay particular attention to is the value of the whole of contiguous parcels versus the value of the whole minus the donated parcel, and Form 8283 required for each and every single non-cash charitable donation. I can’t say how that affects the project you worked on but you may want to double check and see.

I can see HOW 10 contiguous could be done on a ‘single form’ but that form (addendums) would have to include ten separate complex ‘before & after analyses. Not only could you do it, but IRS would also almost certainly prefer (insist on?) it.

We commonly have two properties on the same form, typically one is the site with a House and the other a Vacant Site or a site with a Detached Garage where the Lender is using both to back the loan

Yes your entitled to your opinion, but on something as important as this subject I’ll wait and read the expert’s answer.