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This just about sums it up

 

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There's plenty of confusion out there. But it's starting to get easier as the various constituencies are absorbing industry best practices. It used to take me all of an hour to describe how the industry has been turned on its head by Fair Value accounting, and (more importantly) what to do about it. Today, it was a quick back-and-forth that took a grand total of four emails to sort it all out:

Client email: "I was hoping we could schedule a call with our auditor to discuss our valuation requirements."

My email: "We strongly believe that valuations should be dual-purpose; that is, conducted according to Fair Value standards to satisfy tax (IRC 409A) and GAAP (SFAS 123R) requirements."

Audit Partner's email: "I agree. We like to see a dual purpose valuation that meets the AICPA TPA guidelines using an option pricing model to allocate enterprise value to common stock (avoiding use of the current value/liquidation model). As long as that is what you're doing, then no need for a call."

My email: "That's exactly what we're doing. [Client,] I'll ring you shortly to discuss details."

That's progress in the form of efficiency.

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To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in Arcstone communications, unless expressly stated otherwise, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.

This is our way of saying that Arcstone does not give tax advice. We provide valuations, not tax advice.