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How will Your Assets Be Valued if You File a Georgia Offer in Compromise?

Have you ever wondered “How will my assets be valued if I file a Georgia Offer in Compromise?”  I’ll tell you.

Hi, I’m Jeff Fouts, a tax attorney located in metro Atlanta, with a state-wide, and nationwide, law practice helping clients who have serious Georgia tax problems.

So, “How will your assets be valued if you file a Georgia Offer in Compromise?”

In order to determine what a proper amount of money to offer in a Georgia Department of Revenue Offer in Compromise, two areas of your finances must be evaluated.

The first is your disposable income, and the second is the valuation and equity of your assets.

I will discuss property valuation here.

Property Valuation

Most people understand what property valuation means, but when it comes to some assets, especially large value assets such as your personal residence or a second home, folks tend to stop thinking about valuation rationally and begin to think emotionally.

There are several different kinds of property valuation.  The most commonly known one is Fair Market Value (FMV). The definition of Fair Market Value is:

“What a willing buyer will pay a willing seller”.

This is the valuation that is typically used unless there is a valid reason to use another valuation method.

Let’s assume a house has been listed with a realtor and has been on the market for two years.  Let’s further assume that the price the house was listed for was the true Fair Market Value.  If the house is not selling, and not even getting much interest or visits, then you could put forth an argument that even though the house would usually be valued using the Fair Market Value method, that in this situation this is not a good valuation method, and that the value should have some amount of a discount applied.

The discount could be 10%, 20% or whatever makes sense in light of the particular circumstances, and that you can get Georgia to accept.

Other valuations include:

-Wish market value (“I wish my house, or some other asset, would sell for a certain amount of money because:

- that’s how much I want for it.  OR

- that’s how much I gave for it. OR

- that what I owe on it.

-Quick Sale Value (get perhaps a 20% discount for example),

-Fire Sale Value (get perhaps a 40% discount for example), and

-Fractional Ownership Value (get perhaps a 50% to 90% discount for example).

Debt Picture

The valuation step is just one part of determining the equity of an asset.  The other part is the debt picture.  This can be confusing to some folks because you must analyze each asset by itself, with its own individual valuation and debt.  You shouldn’t combine the rough valuations of all assets and subtract the debts for all assets to determine what your equity picture is.  You will get a more accurate picture if each asset is looked at separately.

The debt picture itself has two different components.  One is the amount of the debt, and the other is how long the debt’s financing period has remaining on it.

You should get a document from your creditor that shows what the exact pay off amount of each debt is.  They should supply this to you with no hassle.

The pay off document may show how much of the financing period is left, but if not, you should request a document showing this as well.

Conclusion

I hope this important video tip has helped you understand the Georgia Department of Revenue a little better and about how tax problems are solved.  Chances are you have questions or concerns about your own particular tax problem.  What I encourage you to do is pick up the phone and call me.  I can answer your questions.  Over the past 20 years I’ve represented clients all across Georgia, and in 50 states and 29 foreign countries, and I welcome your call.  You can reach me at (888) 995-6785 or by email at jfouts@taxhelpattorney.com.  I’m Jeff Fouts and thanks so much for watching.  Have a wonderful day.

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