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4A — September 26 - October 9, 2014 — M id A tlantic
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M id A tlantic R eal E state J ournal By Robert Dietrich, MAI, CRE, Colliers International The Court reverses a reversal
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ike appraisers, the Courts are subject to re- view. An appeals court
ment agencies. Tax Court rulings have helped to develop acceptable methodology in a number of valuation areas such as conservation easements, partial interest valuations, and other types of valuations. One case that is interesting in terms of precedent and IRS rules is Scheidelman case. This ruling by Judge Cohen in 2010 addressed the valuation of an historic preservation easement on a residential structure in Washington DC. In the case, the Court ruled that the ap- praisal that valued the ease- ment was not a qualified ap- praisal . The appraiser simply
HACKENSACK,NJ — NAI James E. Hanson announced that RandyHorning , a senior sales associate, has joined the company’s growing team. Horning brings seven years of commercial real estate sales experience to NAI Hanson. He comes to the company from LB Commercial Realty , where servedas abroker associateand assistant manager. Horning will be working closely with Darren Lizzack , an associate vice president, in the medical office arena. n NAI Hanson hires Randy Horning as senior associate 3. T.C. Memo. 2013-18UNITEDSTATES TAX COURT HUDA T. SCHEIDELMAN AND ETHAN W. PERRY, Petitioners v. COMMISSIONER OF INTERNAL REV- ENUE, Respondent - U.S. Court of Appeals for the Second Circuit, Scheidelman v. Com- missioner, 682 F.3d 189 n applied a 10% adjustment to the “before” value estimate the “after” value. The court ruled that the methodology was not acceptable under the regula- tions and denied the deduction. The taxpayers appealed the ruling to the Court of Appeals. The case was overturned and the appeals court ruled the report substantially complied and therefore was qualified. The issue was sent back to the Tax Court for a determination of value. This is where things get interesting. Judge Cohen of the Tax Court was required to accept the valuation report as a qualified appraisal. She then went on to determine value. In her ruling Judge Cohen ac- cepted the fact that the report was qualified per regulations as determined by the appeals court. However, she still did not find that the methodology was correct by the original ap- praiser or a second appraiser hired by the taxpayer who used the same methodology. The Court ruled that the easement had no value and denied the tax deduction for donation of the easement. The lesson learned from this case is to follow the require- ments of the IRS regulations to the letter. While it was seen by the Court of Appeals as adequate, it still failed the taxpayer in Tax Court due to improper methodology. 1. T.C. Memo. 2010-151 - United States Tax Court Huda T. Scheidelman & Ethan W. Perry, Petitioners V. Commissioner of Internal Revenue, Respondent 2. The term qualified appraisal is a technical definition under Section 170 of the Internal Revenue Code and includes a number of requirements.
can reverse a lower court, w h i c h i n turn can be reversed by the Supreme Court. Until a case reach- es the end of the line, the
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outcome can be in question. We have been taught that court precedence is important, especially when dealing with complex valuation assignments for the IRS and other govern-
QUALIFY TO ASSURE YOUR SUCCESS BEFORE THE IRS &COURTS
Attend the 2014 IRS VALUATION SUMMIT October 21, 2014—GrandHyatt inWashington, D.C. In Tax Court appraisals are too often rejected. How can you avoid having your work rejected by the IRS and the courts? Join US Tax Court Judges, IRS Appeals Officers, IRS Appraisers, Attorneys, CPAs, MAIs and other experts involved in Fair Market Values to learn answers and explore solutions. And, earn 7 hours for credentialing or licensing. Learn more: www.appraisalinstitutedc.org/summit
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