Case Summaries Estate of Aaron U. Jones v. Commissioner, T.C. Memo. 2019-101

The opinion of Tax Court Judge Pugh in Jones, regarding the gift tax value of interests in passthrough entities conducting a timber business, is the first time in 20 years that the analysis and judgments of taxpayers’ valuation experts about “tax-affecting” the earnings of S corporations and other passthrough entities appear to have found an understanding audience in the Tax Court.  In addition, the opinion reinforces recent trends rejecting the use of an asset-based approach to valuation of operating businesses, especially in a business with very long yield cycles like the timber industry.