Family Limited Partnership Valuations
ATI Capital Group, Inc. ("ATICG") is a leader in the valuations of Family Limited Partnerships ("FLP") and Limited Liability Companies ("LLC"), taxed as a partnership. Our experience has allowed us to value over 850 FLPs over our twelve year history and currently we value between twenty and thirty FLPs annually. That experience has allowed us to assist attorneys and become part of the planning team, reviewing documents and providing input regarding valuation issues. We also work with the client’s accountant to assure that ongoing operational reporting matters are completed. In short, our involvement with the attorney, accountant, client and investment advisor provides a team approach that assures all aspects of this planning tool are properly implemented.
Valuation Approaches
Our approach to the FLP valuation process is unique in that we have spent substantial time, and completed the research necessary, to treat FLPs as a unique entity rather than an abbreviated version of a stock valuation. To that end, ATICG has been able to find and develop proxies from data in the market place for FLP discount calculations that are superior to the proxies appropriately used when valuing privately held stock. Our closed-end fund analysis, used in determining the discount for a lack of control, was accepted by the court in the Estate of Strangi v. Comr. 115 T.C. #35, page 26 and furthermore, the IRS now uses our closed-end fund analysis when attempting to challenge FLP valuations. Secondly, we have developed an extensive analysis of the Partnership Profiles Partnership Spectrum annual discount study of publicly registered, but not publicly traded, partnerships. This analysis has allowed ATICG to determine, and demonstrate, that investors are driven by two factors; yield and the prospect for future yield, when determining the discounts associated with these registered, but not publicly traded, partnership units. This has been a point of contention in many courts in that absent proper documentation, for example that which is used when determining discounts for privately held stocks, the courts have begun to ascribe discounts of partnership units based on the composition of the underlying assets of the partnership (see Lappo vs. Comr.T.C. Memo 2003-258). This valuation theory undertaken by the courts is not only incorrect, it disregards the true economics of FLPs. Of course the courts are able to move in this direction absent proper taxpayer representation and explain in easy to understand terms. In short, our discounts are based on the best "proxy" available in the public domain, based on independently verifiable data, are easy to understand and have most of the “judgment” removed from the computation. Furthermore, because we use a more exact proxy, we can make supportable adjustments to the calculated discounts for the restrictions in the subject entity's document that do not exist in the public domain. Lastly, because we apply our theory consistently, regardless as to whether we are representing the Department of the Treasury or the Taxpayer, our valuations reflect the true economics of the entity being valued.
FLP Articles
FLP Valuation Discounts -It's All About Finding a Better Proxy
Regarded Court Cases
FLP Documents Download
Download the FLP Fee Schedule in PDF format to assist you in planning your Limited Partnership.
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