In Uncategorized on 01/09/2020 at 19:15

Stephen Thielking of Oden & Thielking, C.P.A.s, P.C. (O&T), is back, but his qualification as appraiser of non-publicly-traded stock doesn’t help him when he appraises the shares from one of his son Ed’s companies as it goes into the ESOT of another of his son’s companies, in Ed Thielking, Inc., 2020 T.C. Memo. 5, filed 1/9/20.

Steve was here before, pseudonomously, in my blogpost “Appraising the Appraiser,” 6/27/18, but there he wasn’t appraising any family stuff. And Steve wasn’t invariably successful in his other trips to 400 Second Street, NW. See 2020 T. C. Memo. 5, at p. 3, footnote 2.

Besides Steve’ unsigned and unstated qualifications in every appraisal, parents can’t appraise their kids’ stock, at least for tax purposes. And neither Ed nor Mrs. Ed (Amy) performed any services for their Sub S, so their 401(a)(16) and 415(c) contribution limits were zero. Might be a good idea to show some income and withholding from your Sub S if you want ESOT largesse.

Amy hadn’t the requisite service to qualify as a participant in the ESOT.

Steve and Ed claim substantial compliance, but ex-Ch J L Paige (“Iron Fist”) Marvel, cool as ever, refrains from guffaws. Steve and Ed don’t come close.

Of course, the ESOP and ESOT plans were never amended when required. Steve claims they were, but “…the Department of Labor and the IRS seized the ESOP’s records from its accountant.” 2020 T. C. Memo. 5, at p. 22. Now this move worked for Andy Ross; see my blogpost “A Good Excuse,” 9/28/12. But IRS asked for Ed’s documents eight (count ‘em, eight) months before said seizure, and Ed gave them nothing.

There’s more, of course, as ex-Ch J Iron Fist provides a checklist of every indicium of phony plan one could ask for.

Practitioners, add this one to your toolkit. And don’t do it.

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