When is a “Done Deal” Not Done? … Avoiding a Prearranged Sale To Maximize Tax SavingsWhen is a “Done Deal” Not Done? … Avoiding a Prearranged Sale To Maximize Tax Savings

The issue of valuing gifted shares of a publicly traded corporation is usually as simple as averaging the high and low on the date of completed transfer.¹ Sometimes, post-transfer events should be considered in valuing the shares.²

Specifically, complications arise when a merger or a redemption follows soon after a transfer whether it be to a charity or a trust. Chief Counsel Advice 201931002, issued Sept. 27, 2019, provides a timely refresher of the important income and transfer issues to be navigated.

Impending Merger

CCA 201931002 addressed how an impending merger impacts the valuation of a gift under the hypothetical buyer-seller standard.³ Although the taxpayer was seeking guidance on valuing the shares funding a grantor retained annui...