(This is a good place to note that you will probably not know you need an Appraisal until your Attorney, Banker, CPA, Leasing Agent, Insurance Underwriter, or other Professionals like a Business Broker tell you one is needed.)
Here is a simple list of the top 20 reasons a Certified Appraisal can be triggered.
(In no particular order)
Buy /Sell Agreements – Either argue it out or get real world values (I suggest getting your Appraiser to give you all of these Values : Fair Market, Orderly Liquidation, and Forced Liquidation) Ask us if you need these defined.
Converting from C to S-Corp – If your Tax Advisor is saying do this before you get to retirement. Surprise!!!, the IRS wants a Certified Appraisal attached.
Loans / Financing – Don’t be fooled here the SBA and the FDIC require a Certified Appraisal and they will audit (Dealers and Auctioneers no longer qualify unless they are Certified. Paying for 2 Appraisals because of ignorance is NO fun – I suggest you interview your Appraiser and ASK flat out “are they Certified and by who”.)
Leases – Again the IRS is watching your values
Insurable Value – Insurance Professionals need to know real values and that you truly own it (Interesting side note a Certified Appraisal will show you all information in case of Fire, Flood, Theft, Etc. due to having a full documentaion of the Assets Model, S/N, Age, Condition Etc. – Keep a copy in a safe location just in Case)
Tax Purposes – It comes back to the IRS and avoiding the notorious “Audit Lottery”
Foreclosures, Bankruptcy / Insolvency – Here is a sticky one, you want a true value applied to your equipment especially if you are going through a restructure. If you rely on guessed values it could really cost you in todays economy with values being so volitale.
Estate Planning, Gift Estate Planning, Trust Planning, Retirement Planning – Without proper values in place again the IRS can catch you or the ones who follow off gaurd if the correct values were not placed. Again the IRS requires a Certified Appraisal at this time.
Divorce Settlements – Never fun to deal with but a Certified Appraisal takes all of the guesswork out of this situation.
Litigation Support – Again the Lawyers job becomes easier with a solid value on the Equipment and Assets of the Business. A good Certified Appraiser is worth every penny when they are defending their Appraisal on the stand – Remember the Appraiser is an Advocate of the Appraisal Only and will not be Bias, be sure your Appraiser has the Certification to withstand scrutiny.
Mergers and Aquisitions – The Appraisal can verify existence of equipment that a depreciation schedule cannot, Some Certified Appraisers can also be hired to record Inventory Counts and Equipment Location (this Machine is located in X building or at X Location).
Sarbanes Oxley, 1031 Exchanges, FASB 141 and 142, GASB 34 – All of these situations require a Certified Appraisal or in some situations yearly Appraisals – Consult your Accounting professional to verify your complinace here as there are hefty Fines Associated with Each
In our next Blog we will discuss how Business Owners, CPA’s, Bankers and Lenders, and Attorneys engage an Appraiser and some thoughts on what to ask to Verify your Appraisal will be Irrefutable, Defensible, and Frankly what you Need.
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