Quote:
Originally Posted by Advogado
To expand on my previous post, .... the IRS never ruled that the CDD's paid less than the assets were worth...
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I too am a little uncertain as to the current status of the valuation audit(s) of the sold amenities. But I think it went like this:
The original agent pretty much valued the properties strictly on their physical asset value plus a modest amount of profit for a like facility. This caused an uproar in the press since the VCCDD paid tens of millions of dollars more to purchase it from the developer.
Last year the IRS attempted to settle the argument by hiring an independent auditor just to determine the true value of the amenity facilities (golf courses) that were sold. She ultimately concluded that it was worth something like 25-30 million when applying 15 years of amenity revenue to the formula. Or in other words about half of what the VCCDD actually paid.
Shortly thereafter the VCCDD attorney(s) issued letters and statements applauding the auditor for finally agreeing them that the amenity revenue should be included. But then they added their own little twist by saying that a “slight” error had been made and that the revenue stream should have been based on 30 years as is allegedly customary when a private utility company sells a water or sewage plant to a municipality, not 15. Then after running the numbers back through at 30 years they came to the conclusion that the VCCDD actually paid slightly less than what they claim is the true value of the property.
But I too have not seen a response to this latest argument from the IRS.