Archive 2011-41: Lance Hall Rebuts IRS Criticisms




Lance Hall Rebuts IRS Criticisms of the FMV Opinions Restricted Stock Database

presented by Lance Hall, ASA

Archive 2011-41: Webinar Broadcast Date September 8, 2011

As you are all aware, the recent IRS’s blockbuster document “Discount for Lack of Marketability Job Aid for IRS Valuation Professionals” critiqued the
most well-known discount for lack of marketability methodologies used by valuation professionals, including the well-respected and widely used FMV
Restricted Stock Study.

In an August 23, 2011 webinar we presented a summary of these critiques as presented in the IRS DLOM Job Aid. In this webinar, Lance Hall will rebut
the criticisms of the IRS and will also relay the successes he has enjoyed in using the FMV Opinions data.

Lance will rebut the IRS’s criticisms by showing:

· The IRS has not shown that the key characteristics suggested by FMV are statistically invalid.

· FMV’s data is the best market evidence for determining DLOMs on restricted stocks and private equity and has consistently been treated
favorably in Tax Court.

· Not every appraisal technique lends itself well to statistical analysis – appraisers use comparative analyses to determine P/E ratios and can
do the same to determine the DLOM.

· Why the appraiser can confidently use market evidence from large blocks of restricted stock to determine the DLOM for private equity.

. As presented in the comprehensive Companion Guide to the FMV Restricted Stock Study, FMV has taken great care to isolate different factors
that impact the DLOM, such as firm characteristics, block size, and market volatility.

· By measuring the impact of market volatility (as measured by the VIX) on the DLOM, FMV controls for changes in market conditions over the
long time frame of the FMV Study.

Learning Objectives:

· The participant will learn Lance’s response to all the criticisms of the FMV Opinions studies, database and models contained in the IRS DLOM
Job Aid

· The participant will learn how to properly use the FMV Opinions data

· The participant will learn of the successes that Lance has had using the FMV Opinions data

Webinar Outline:

  • Introduction to the FMV Opinions studies, database and models
  • IRS’s criticisms of FMV Opinions restricted stock database and methodology including the restricted stock equivalent analysis
  • Lance’s responses to all the criticisms
  • Why the FMV Opinions data is superior to general benchmark determinations of DLOMs
  • Successes in the use of the data

Included in this downloadable package are:

  • Audio/Video file
  • Webinar transcript
  • Original Webinar handouts

The archived webinar package is an Adobe Presenter PDF file that allows you to view the video of the webinar with the synced audio so that you see the presentation just as it was presented “live.” The Presenter format also allows for easy navigation through the webinar so you can quickly go to a specific section in the presentation. The handout materials are included in the file. To view the Webinar Presenter file, you must have Adobe Reader software version 9 or higher. You can download the free current version of Adobe Reader at Please note that CPE is only available for live webinar broadcasts.

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