Page 31 - Business Valuation for Estates & Gift Taxes

VS section 100 paragraphs .51–.70 provide guidance on the components to be included in a detailed re-
port, much of which is self-explanatory. Although there is no required sequence for the report compo-
nents, the report must flow in a logical, sensible manner that is easily followed by the reader.

VS section 100 paragraph .51 states

The detailed report is structured to provide sufficient information to permit intended users to un-
derstand the data, reasoning, and analyses underlying the valuation analyst's conclusion of value.
A detailed report should include, as applicable, the following sections titled using wording simi-
lar in content to those shown:

 Letter of transmittal

 Table of contents

 Introduction

 Sources of information

 Analyses of the subject entity and related nonfinancial information

 Financial statement and information analyses

 Valuation approaches and methods considered

 Valuation approaches and methods used

 Valuation adjustments

 Non-operating assets, non-operating liabilities, and excess or deficient operating assets, if
any

 Representation of the valuation analyst

 Reconciliation of estimates and conclusion of value

 Qualifications of the valuation analyst

 Appendixes and exhibits

A valuation report must persuade the intended user (for example, IRS, Tax Court) that the information
and analyses present a conclusion that is reasonable, supportable, and replicable. To prepare a valuation
report with this logical structure, the valuation analyst must clearly document each step, from the collec-
tion of the raw data to the synthesis and conclusion of value. This framework will help show the user
that careful attention was given to all aspects of the report.

VS section 100 paragraph .52 suggests the following information be provided in the introduction section
of the report so that the intended user can understand the nature and scope of the valuation engagement,
as well as the work performed:

a. Identity of the client

Page 29 ©2015, AICPA