FVC2336. Dealing with Real Estate in Valuation of Operating Entities and Real estate Holding Companies

There are special nuances to dealing with real estate in the valuation of either an operating company or a real estate holding company. In an operating company, there are multiple ways to treat real estate including treating it as a operating asset or treating it as a non-operating asset. Depending on how you treat the real estate could have an impact on the overall value you derive for the business. In addition, when valuing an entity that owns and rents real estate, the process is different from how you would treat real estate in an operating entity. This session will identify the different considerations in how real estate is treated in an operating entity and a real estate holding company and some considerations on how deferred tax can be treated when the fair market value is different from the tax basis.

Learning Objectives:

• Identify the different options for treatment of real estate in operating entities and holding companies
• Compare the treatment of real estate in the different approaches (Income, cost and market)
• Compare the differences in value if real estate is treated as an operating asset versus nonoperating asset
• Analyze the tax implications when assessing the fair market value of real estate (deferred tax upon sale, etc.)