Welcome to CPA at Law, helping individuals and small businesses plan for the future and keep what they have.

This is the personal blog of Sterling Olander, a Certified Public Accountant and Utah-licensed attorney. For over nine years, I have assisted clients with estate planning and administration, tax mitigation, tax controversies, small business planning, asset protection, and nonprofit law.

I write about any legal, tax, or technological information that I find interesting or useful in serving my clients. All ideas expressed herein are my own and don't constitute legal or tax advice.

Valuation Discounts

One of the primary objectives of estate planning is to arrange for the transfer of wealth to the next generation at the lowest possible cost. For large estates, the most significant cost is the gift and estate tax. These two tax regimes are essentially a single tax imposed on total lifetime gifts plus the value of property transferred at death. As mentioned in a previous post, gifting during lifetime can be part of an estate planning strategy.

For a gifting example, assume a gift tax rate of 40% and a donor who has previously utilized his or her entire tax exemption and who desires to make a gift of $1,000,000 of a $4,000,000 investment in a publicly-traded company.

After making the gift of the $1,000,000 asset, the donor will pay a $400,000 gift tax. Obviously, a key factor in the calculation of the gift tax is the valuation of the stock that is the subject of the gift. In this case, the valuation is straight-forward because the stock is easy to sell and has a ready market.

However, consider the gift of a small, privately-owned family business. In this case, the value of the asset will reflect the fact that there is not a ready market for the business; it is more difficult to sell. In addition, the value of a minority interest in a private business will reflect a lower value if the owner does not have managerial control.

For planning purposes, both the "lack of control" and "lack of marketability" discounts can be effectuated in not only the small, privately-owned family business context, but also for nearly any other asset. For example, suppose that the owner of the $4,000,000 stock investment first transfers the stock into a limited partnership. Subsequently, if the owner transfers a 25% limited partnership interest to a donee, the value of the gift for gift tax purposes will be less than $1,000,000.

This is because there is not a ready market for a privately-owned partnership interest. Furthermore, instead of owning $1,000,000 worth of publicly traded stock outright, the donee merely owns a 25% limited interest in a private partnership. Since the donee lacks managerial control over that interest, it does not matter that the underlying asset is publicly-traded stock; the lack of control discount would apply in addition to the lack of marketability discount.

If the total valuation discount in this case works out to be 30%, this results in a gift valuation of $700,000 instead of $1,000,000. This results in an accompanying gift tax of $280,000 instead of $400,000, an immediate cash savings of $120,000 simply by utilizing the limited partnership.

Source: Valuation, Jonathan C. Lurie and Edwin G. Schuck, Jr., The American Law Institute - American Bar Association Continuing Legal Education, 2008

Basic Visual Basic for Excel Part IV

This is the fourth and last post in my introduction to learning and utilizing Visual Basic in Excel. As you may have guessed or experienced, writing Visual Basic code from scratch is extremely difficult. Realistically, there are simply too may classes, properties, commands, and syntax rules to learn before a beginner can automate a task by coding from a blank slate. Fortunately, there is an easier way.

If you need to automate a repetitive task in Excel, consider recording a macro, whereby the code for the actions you take is written automatically. The Record Macro button is located in the Macros menu, which is within Excel's View menu. The "Use Relative References" button at the bottom toggles between relative and absolute references on your spreadsheet. If the task you are trying to automate will always occur at the same location on the spreadsheet, make sure Use Relative References is off. However, if the task you are trying to automate will happen at different locations on the spreadsheet, highlight Use Relative References.

One task I find myself repeating a lot, when working with a filtered table in Excel and after having implemented multiple filters, is needing to unfilter the whole table. To do this, I usually just click the Filter button from the Data menu to turn off filtering, select the whole sheet, and click the Filter button again. To demonstrate how to automate this repetitive task, I will record a macro. In order to follow along, you will need a filtered table in Excel (if you need a quick data set, feel free to copy the entity table I used in this previous post).

After filtering one of the columns in your table, click View, from the Macros menu click Record Macro, select a shortcut key (such as Ctrl+Shift+A), and press OK. Everything you do until you click Stop Recording from the same Macros menu will be automatically coded into a new module. While recording, first unfilter the entire sheet by clicking View, Filter; second, select the entire sheet by clicking in the blue box to the top left of A1; and third, click Filter again. Press the Stop Recording button, and within your Visual Basic editor (click Alt+F11 to get there) you should have the following code in Module1:

Sub Macro1()
' Macro1 Macro
' Keyboard Shortcut: Ctrl+Shift+A

End Sub

From the spreadsheet, you are now able to unfilter the entire table easily by clicking Ctrl+Shift+A each time. This has been an example of recording a macro, and this concludes my four-part primer on how to automate tasks in Excel with Visual Basic. I anticipate posting subroutines that I use from time to time, but feel free to comment or contact me with your coding challenges or successes; I may address them in a future post as well.