TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, November 16, 2011

Number of Appraisers, Gender of Judge Affect Result in Tax Valuation Cases

Mark Jackson, Sonja PippinJeffrey Wong (all of the University of Nevada, Reno), Asset and Business Valuation in Estate Tax Cases: The Role of the Courts:

The U.S. court system plays an important role in resolving asset valuation disagreements between taxpayers and the taxing authority. Prior literature supports the notion that in estate tax cases, courts act as compromiser choosing a value somewhere between the estimates arrived at by the taxpayer and the IRS. Some studies argue that the tax courts chose the arithmetic mean between the two estimates. Using models from prior literature and an updated data set, we re-examine the role of the courts in appraising disputed asset value estimates. In addition to testing the concept of courts acting as compromisers, we investigate whether there are certain factors related to the case, the judge, and the economic environment that might influence the judge’s decision. We find evidence that suggests that the number of appraisers used by the taxpayer, the gender of the judge, the type of asset being valued, and the size of the U.S. deficit are related to the decisions of the court.

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I scanned this and found it interesting. Unfortunately, the study is concerned solely with fact-finding by judges. Juries often hear valuation disputes in tax refund suits in the federal district courts. To be sure, the numbers of such cases are much smaller. Nevertheless, significant cases are heard in those courts.

Posted by: Publius Novus | Nov 16, 2011 7:18:19 AM