Appraiser concerned about fewer transactions in Partnership Profiles database

Less than half (46.5%) of respondents to our recent survey on DCF inputs and analysis still rely on the data from Partnership Profiles to determine discounts for family limited partnerships and similar companies holding real property interests. Just over a quarter (27.1%) indicated they were “concerned about relying on the decreasing number of transactions in the database,” while roughly the same number, 26.4%, chose to provide further comments.

“We still subscribe and look at the data,” said one respondent, who reflected the general consensus that the database provides “just another data point in helping to quantify the discounts” and serves as a reasonableness check before the appraiser “makes an informed decision” based on all the facts and circumstances. Another participant broadens the sample size “to cover a range of years and asset classes,” and then adjusts the observed discount “down to reflect the element of reduced liquidity relative to a liquid securities market.”

How to make the most informed judgments using all relevant data. On December 4, Bruce Johnson (Munroe, Park & Johnson) led the BVR webinar on  “Using Empirical Data to Value Family Limited Partnerships,” Part 3 of BVR’s 5th Annual Online Symposium on Estate & Gift Tax.  The audio, materials, and transcript will be available this week as part of BVR's Desktop Learning Center.