Hi everyone,
Hope this blog once again finds you doing great. In this month’s blog, I decided to make reference to a very recent Law Review article on tax administration and valuation authored by Leandra Lederman ((Lederman, Leandra, Valuation as a Challenge for Tax Administration (January 5, 2021). Notre Dame Law Review). In this article, while focusing on US Tax Administration, the concepts presented in this paper would be applicable globally. For instance, the area of international transfer pricing is an extremely complex area not only in the taxation realm but also in the valuation of those related party transactions. Since valuation is so subjective as we all know, these tax examinations can last a significant time due to determining appropriate methods, hiring outside valuators and so forth. According to Ms. Lederman, the late US Tax Court judge Theodore Tannenwald, Jr. suggested in several cases that he heard that these valuation cases should be handled by negotiation outside of the courts due to it time consumption. Add to the fact that the US tax authority, the Internal Revenue Service, loses most of those cases in court suggest that a superior approach is needed in handling these disputes. Shouldn’t there be other venues to decide disputes in valuation? As long as valuations are subjective and as long as individuals seek to minimize their tax liabilities, disputes are just part of the cost of doing business. Until next time…………………
Joel
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