- Valuation Scenario 01 / Estate & Gift Tax
Estate and Gift Tax Business Valuation Services
Defensible, audit-ready business valuations for Form 706, Form 709, trust funding, and equitable estate distribution. Built for the CPAs and estate planning attorneys who need a valuation specialist they can refer to without hesitation.
CVA Credentialed
NACVA Member
USPAP Compliant
Southern California
- The Adequate Disclosure Standard
TC Advisors provides Certified Valuation Analyst (CVA) business appraisals for federal estate tax (Form 706), federal gift tax (Form 709), trust funding, and equitable estate distribution engagements. Every report is built to the Adequate Disclosure standard under Treas. Reg. § 301.6501(c)-1 — so the three-year statute of limitations on your client’s gift tax return actually runs. Most valuations don’t meet this standard. We don’t deliver one that doesn’t.
- For CPAs & Estate Attorneys
Built for the Professionals Who Need a Valuation Specialist They Can Trust
If you’re a CPA preparing an estate or gift tax return, or an estate planning attorney structuring a wealth transfer strategy, you already know the problem: most business valuations prepared for estate and gift tax purposes either don’t survive IRS scrutiny, don’t qualify for Adequate Disclosure, or aren’t defensible if the valuation discounts get challenged.
TC Advisors exists to be the CVA your firm refers to when the valuation has to hold up.
We’re a Certified Valuation Analyst firm based in Southern California, serving CPAs, estate planning attorneys, trust officers, and wealth advisors across San Diego, Orange, Los Angeles, and Riverside Counties. Our practice covers the full business valuation lifecycle — SBA acquisitions, M&A advisory, owner buyouts, exit planning — and that operational breadth is what separates us from the hire-and-forget estate tax appraiser. We don’t just understand IRS valuation standards. We understand the underlying business well enough to defend the valuation conclusion.
Learn more about our full Certified Business Valuation & Appraisal practice.
- Engagement Types
The Four Valuation Engagements We Handle Most
Estate and gift tax valuation isn’t one engagement type — it’s a category that covers several distinct technical disciplines. We handle all four.
Federal Estate Tax Valuation (Form 706)
Required when a decedent's gross estate exceeds the federal exemption — currently $15 million per individual ($30 million per married couple) under the One Big Beautiful Bill Act of 2025, effective January 1, 2026, with annual inflation adjustments thereafter. Closely held business interests must be valued at fair market value as of the date of death (or, if elected, the alternate valuation date six months later under IRC § 2032).
What this valuation must include to be defensible:
- Detailed financial analysis of the operating business
- Standard of value: fair market value under Rev. Rul. 59-60
- Application of all three approaches (income, market, asset) with reasoning for weighting
- Discount for lack of marketability (DLOM) supported by empirical data (restricted stock studies, pre-IPO studies, and/or option pricing models)
- Discount for lack of control (DLOC) where the interest is non-controlling
- Conformity with USPAP and SSVS No. 1
- Adequate Disclosure documentation under Treas. Reg. § 301.6501(c)-1
Federal Gift Tax Valuation (Form 709)
Required when a lifetime transfer of business interests exceeds the annual gift tax exclusion ($19,000 per recipient in 2026) or when the donor wishes to start the three-year statute of limitations running under Adequate Disclosure. This is where the post-OBBBA strategic landscape gets interesting. With the $15M exemption permanent, many high-net-worth families are no longer racing to use exemption before sunset — but they are still gifting business interests to remove future appreciation from the estate, to fund family limited partnerships (FLPs) and family LLCs, and to capitalize on valuation discounts. Each of these transfers needs a defensible valuation.
Trust Funding and Wealth Transfer Vehicle Valuations
Business interests transferred into Grantor Retained Annuity Trusts (GRATs), Spousal Lifetime Access Trusts (SLATs), Intentionally Defective Grantor Trusts (IDGTs), and dynasty trusts must be valued at the time of funding. The valuation determines the gift amount, the GRAT annuity payment, and the basis of the trust's eventual distributions.
These engagements often involve coordination with the drafting attorney on the optimal timing of the transfer, the entity structure, and the discount strategy.
Estate Administration and Equitable Distribution Valuation
Not every business valuation for an estate is for a tax filing. When a decedent's business interest must be divided among multiple heirs — for example, a closely held company that must be split equally among three beneficiaries — the executor or trustee needs a defensible fair market value to support the distribution.
These valuations may not face IRS scrutiny, but they face something arguably more difficult: beneficiary scrutiny. A valuation that one heir believes undercuts their share will end up in probate court. We prepare these engagements to the same standard as IRS-facing work.
Step-up in basis documentation: Under current law, heirs receive a step-up in basis to fair market value on the decedent's date of death. For estates under the $15M exemption — which is now most estates — a defensible date-of-death valuation is not a tax-minimization tool. It's a tax-optimization tool that locks in the highest defensible basis for the heirs and minimizes their future capital gains exposure when the business is sold.
This is increasingly the most strategically valuable estate valuation we prepare.
Pairs with our Exit Planning & Succession services when the heirs eventually decide to sell.
- Defensibility
What Makes a Valuation Defensible — and Why Most Aren't
The IRS challenges estate and gift tax valuations more than any other category of business appraisal. The contested issues are almost always the same.
The discount for lack of marketability is too aggressive and inadequately supported.
DLOMs in the 30–45% range are common for non-controlling interests in private companies. DLOMs above that range — sometimes seen as high as 50–55% — draw audit attention unless the supporting analysis is rigorous. We support every DLOM with multiple methodologies: restricted stock studies (FMV Opinions, Stout, LiquiStat), pre-IPO studies (Valuation Advisors, Willamette), and option-pricing models (Finnerty, Chaffe, Longstaff) where the facts warrant.
The discount for lack of control is applied without supporting analysis.
Many appraisers apply a generic minority interest discount based on Mergerstat or Control Premium Study data without analyzing whether the specific interest at issue actually lacks control. A 49% interest in a deadlocked two-owner company may have more control than a 49% interest in a company with a controlling shareholder. We perform the analysis.
The Adequate Disclosure standard is not met.
Under Treas. Reg. § 301.6501(c)-1, the three-year statute of limitations on a gift tax return only begins to run if the return adequately discloses the transfer. The valuation report must include specific elements: description of the property, valuation method, financial data relied upon, and a statement of qualifications. We build every report to this standard by default.
The standard of value is misapplied.
Estate and gift tax valuations require fair market value under Rev. Rul. 59-60 — the price at which the property would change hands between a willing buyer and willing seller, neither under compulsion. This is not the same as fair value (used in shareholder disputes), investment value (used in M&A), or strategic value. Conflating these standards is one of the most common ways estate valuations fail under IRS or court review.
- Engagement Process
Our Process
We engage estate and gift tax valuation work in five phases.
Scoping and Engagement Letter
We coordinate with the referring CPA or attorney to define the standard of value, the valuation date, the scope of the analysis, and the intended use of the report. Engagement letter executed within 48 hours of intake.
Information Gathering
Comprehensive document request: three to five years of financial statements, tax returns, operating agreements, buy-sell agreements, ownership schedules, and key contracts. We work directly with the referring CPA when financials need normalization adjustments.
Valuation Analysis
Application of the income approach (discounted cash flow and/or capitalized cash flow), market approach (guideline public company and/or guideline transaction methods), and asset approach where applicable. Empirical support for all discounts.
Report Preparation
Detailed valuation report compliant with SSVS No. 1, USPAP, and the Adequate Disclosure standard. Draft delivered to the referring professional for review before finalization.
Defense
If the valuation is challenged on audit, we support the referring professional and the taxpayer through the examination. Engagement scope on examination support is defined separately.
- Methodology
Our Valuation Methodology
Every estate and gift tax valuation engagement at TC Advisors follows a consistent methodology framework — not because we apply templates, but because the IRS, the Tax Court, and every estate planning attorney we work with require defensibility through method.
Three valuation approaches, every engagement.
We apply all three valuation approaches (income, market, asset) to every engagement and reconcile the results. Where one approach is excluded, the report documents why — because unsupported method elimination is one of the most common audit triggers.
Multi-method discount support.
We support every Discount for Lack of Marketability (DLOM) conclusion with multiple independent methodologies — restricted stock studies, pre-IPO studies, and option pricing models. Single-methodology DLOMs are the most common reason private company estate valuations are challenged on audit.
Documented Adequate Disclosure compliance.
Every report is structured to meet the Adequate Disclosure standard under Treas. Reg. § 301.6501(c)-1 by default. This is not an upcharge or an optional add-on — it is the only standard worth meeting on a gift tax return that the taxpayer wants closed to challenge.
Plain-English defensibility.
Reports are written to be read by IRS examiners, Tax Court judges, and sophisticated taxpayers — not just other appraisers. Technical conclusions are supported by accessible explanations. The valuation should defend itself before we have to.
- Lead Engagement Partner
Brandon Bay, CVA, CEPA
Brandon leads every partner buyout and buy-sell valuation engagement personally. Direct engagement with a credentialed CVA — not associate-level delegation — is a deliberate firm policy.
- For Referral Partners
Why CPAs and Estate Planning Attorneys Refer to TC Advisors
We write reports that get past IRS examiners.
Every report is built to the Adequate Disclosure standard by default — not as an upcharge.
We understand the operating business, not just the valuation math.
Our full-lifecycle CVA practice means we value businesses for SBA acquisitions, M&A transactions, owner buyouts, and growth planning. That operational fluency translates directly into more defensible estate and gift valuations.
We turn engagements around on a professional's timeline.
Estate tax returns have deadlines. Gift tax returns have year-end pressure. We commit to engagement timelines and we hit them.
We protect the referral relationship.
Your client is your client. We deliver the valuation, support the filing, and step back. We don’t cross-sell your client into adjacent services without your introduction.
We're local.
Southern California CPAs and estate attorneys deserve a Southern California CVA who understands the regional market, the typical company profiles in San Diego and Orange County, and the California-specific issues (Prop 19, community property, ABC license transfers when applicable) that affect business valuation in this state.
- Capabilities
Engagement Capabilities
We are equipped to value the following interests for estate and gift tax purposes.
- Operating businesses (closely held C-corps, S-corps, LLCs, partnerships)
- Family Limited Partnerships (FLPs) and family LLCs
- Holding companies (real estate, marketable securities, investment portfolios)
- Minority interests in closely held entities
- Controlling interests in family-owned businesses
- Restricted stock and thinly traded securities
- Carried interest and profits interests
- Promissory notes, intercompany loans, and intra-family debt instruments
- Operating businesses with real estate holding subsidiaries
- Scope of Engagement
What We Don't Do
We do not prepare estate or gift tax returns, provide formal tax opinions, or render legal advice. Those services belong to the CPAs and estate planning attorneys we coordinate with. Our role is the independent, defensible valuation that supports their work — and stays out of it.
- FAQ
Frequently Asked Questions.
What is a qualified appraiser for IRS estate and gift tax purposes?
What is the difference between a valuation for Form 706 and Form 709?
Form 706 is the federal estate tax return, filed after a decedent’s death for estates exceeding the federal exemption. The valuation date is the date of death (or alternate valuation date). Form 709 is the federal gift tax return, filed for lifetime transfers exceeding the annual gift exclusion. The valuation date is the date of the gift. The methodology is similar, but the timing, documentation, and Adequate Disclosure requirements differ.
What is Adequate Disclosure and why does it matter?
Adequate Disclosure refers to the documentation standard under Treas. Reg. § 301.6501(c)-1 that, when met, starts the three-year statute of limitations on a gift tax return. Without Adequate Disclosure, the IRS can challenge the valuation indefinitely. A valuation report that meets the standard must include specific elements: a description of the transferred property, the method used to determine value, the financial data relied upon, and a statement of the appraiser’s qualifications.
How long does an estate or gift tax valuation engagement take?
Standard engagement timeline is four to six weeks from receipt of complete information to final report delivery. Rush engagements can be accommodated when the filing deadline requires it.
Do you provide valuations for Family Limited Partnerships (FLPs) and family LLCs?
Yes. FLP and family LLC valuations are among the most technical estate and gift valuation engagements because of the layered discount analysis (entity-level DLOM, interest-level DLOM, and DLOC). We have the technical capacity to handle them and the citation depth to defend them.
Will you support the valuation if the IRS challenges it on audit?
Yes. Audit support is available as a separately scoped engagement. We do not abandon a valuation conclusion under examination — if the analysis was defensible at the time of the report, we defend it.
Do you work directly with the taxpayer or only through the CPA or attorney?
Either. Most of our engagements come through CPAs and estate planning attorneys, and we follow their preferred communication structure. Some engagements involve the taxpayer directly. We adapt to the referring professional’s protocol.
What standards do you follow?
Every engagement is performed in conformity with NACVA’s Professional Standards, the AICPA’s Statement on Standards for Valuation Services (SSVS No. 1), the Uniform Standards of Professional Appraisal Practice (USPAP), and IRS Revenue Ruling 59-60. Where applicable, we also conform to the Adequate Disclosure standard under Treas. Reg. § 301.6501(c)-1.
- Service Areas
Where We Work
TC Advisors provides estate and gift tax business valuations throughout Southern California:
- Confidential Engagement Inquiry
If you have a client who needs an estate or gift tax valuation, let's talk.
If you’re a CPA or estate planning attorney with a client who needs a business valuation for estate or gift tax purposes, trust funding, or equitable distribution among heirs — let’s talk. We respond to professional inquiries within one business day. Initial consultations are complimentary and held under engagement-letter confidentiality.