The combination of death and taxes may be both inevitable -- in the form of estate tax -- and very unpleasant. In the attempt to reduce estate taxes, one important goal is to determine that the value of property passing subject to the estate tax is as low as possible.
A major battleground in the valuation war is that of "discounts," amounts subtracted from some hypothetical valuation of a property in order to determine the actual value that is subject to tax. Taxpayers' experts seem to be ever more creative and aggressive in identifying new discounts and quantifying their effects. Some of the discounts sought by taxpayers are well known and rather well accepted, such as discounts for minority interests. When a claimed discount is less common, though, one cannot always count on a favorable result, as two recent cases illustrate.
