The Price Is Right - or Else: Congress' Efforts to Eliminate Tax Cheating in Appraisals of Value
![handle is hein.journals/vrgtr5 and id is 69 raw text is: THE PRICE IS RIGHT - OR ELSE: CONGRESS' EFFORTS
TO ELIMINATE TAX CHEATING IN APPRAISALS OF
VALUE
Bruce Kogan*
I. INTRODUCTION
What is the value of a snowfall on Christmas Day to a seven-
year-old child who has just that morning found a brand-new sled
under his tree? While that child might set the worth of that snow-
fall in the millions of dollars, the rest of us, who have to drive to
work the next day, would view the snow-bound landscape only
with annoyance and frustration. Is value then, like beauty, only in
the subjective eye of the beholder, or is there some specific money
value of a thing which can be discerned and widely agreed upon as
objectively correct? Congress apparently subscribes to the latter
theory, at least in the field of taxation, and has over the past sev-
eral years enacted a series of penalty provisions aimed at curbing
underpayment of taxes through the use of improper valuations.'
The tax consequences of a wide variety of transactions will often
turn on the value of the property involved. The treatment by the
Internal Revenue Service of events as disparate as the transfer of
property by gift or bequest, the donation of appreciated capital
assets to charity,3 and the exchange of shares of one class of stock
for shares of another in a corporate recapitalization4 has in com-
mon the question of valuation.
* Associate Professor of Law, Delaware Law School of Widener University. I would like to
thank Stuart H. Zwerling (J.D., Delaware Law School, 1985) for his invaluable research
assistance.
I.R.C. § 6659 (Addition To Tax in the Case of Valuation Overstatements for Purposes of
the Income Tax), enacted under the Economic Recovery Tax Act of 1981, Pub. L. No. 97-34,
95 Stat. 172 (1981) [hereinafter cited as ERTA]; I.R.C. § 6660 (Addition to Tax in the Case
of Valuation Understatement for Purposes of the Estate or Gift Taxes), enacted under the
Deficit Reduction Act of 1984, Pub. L. No. 98-369, 98 Stat. 494 (1984); I.R.C. § 6701 (Penal-
ties for Aiding and Abetting Understatement of Tax Liability), enacted under the Tax Eq-
uity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, 96 Stat. 324 (1982) [hereinaf-
ter cited as TEFRA].
* See I.R.C. §§ 2512 (valuation of gifts), 2031 (valuation of a decedent's gross estate).
* See I.R.C. § 170.
See I.R.C. § 368(a)(1)(E); see also Rev. Rul. 83-120, 1983-2 C.B. 170.](ViewImageLocal?handle=hein.journals/vrgtr5&div=9&collection=&method=preview&ext=.png&size=3)
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The Price Is Right - or Else: Congress' Efforts to Eliminate Tax Cheating in Appraisals of Value
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