Why should I have my business appraised if I’m planning to turn it over to my son or daughter?

Because when the “turning over” takes place, it amounts to a gift that you are providing to your child or children and may also include shares they will be purchasing. (If they are purchasing shares… at what price?) And when the IRS audits the gift, the burden of supporting the value of the property “given” is upon the taxpayer. A well documented appraisal of the business will help establish the gift value and indicate to the IRS that a valuation was performed properly. Minority and/or lack of marketability discounts may also become involved and your appraisal firm should also be able to provide this important service and supply the necessary analysis and documentation.

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