Alliance Machinery and Equipment Appraisals
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John Coto, CMEA, CBI, SBA

Why Certified Appraisals Are Important For Bank Lenders, CPA's, Attorney's, Business Owners, Sellers, and Buyers

Bank Lenders - Why is a Certified Machinery and Equipment Appraisal important? MANAGE RISK!

Mistake #1: Relying on the word of an "uncertified" person to deliver a value on equipment. Auctioneers and machinery and equipment dealers may have a hidden agenda. 99% of these individuals are not Certified or trained in providing USPAP compliant appraisal reports. If the appraisal report you obtain is not USPAP compliant or Certified by a Certified Machinery and Equipment Appraiser, it will not withstand scrutiny! This method is not only inaccurate but filled with liability and risk.

Mistake #2: Guessing at equipment values. Guessing is filled with liability and risk. The loan file will not contain the substantiation needed to support a loan decision.

Mistake #3: Relying on the depreciation schedule. The depreciation schedule is only important to the business owner, CPA, and the IRS. The depreciation schedule will not provide the fair market value, orderly liquidation or forced liquidation value. Once again, this method is filled with liability and risk.

If you can answer "Yes" to any of these situations, you are in need of an Independent Certified Machinery and Equipment Appraisal.

  • Is there a chance that your machinery or equipment loans are under-collateralized?
  • Are you becoming more "asset minded" due to cash flow and economic times?
  • Do you need to know the value of machinery or equipment to secure existing loans?
  • Repossession inevitable?
  • Do you need to verify that the equipment even exists?
  • Is it time to liquidate?

Get The Expertise Of A Certified Machinery And Equipment Appraiser Who Upholds The Regulations, Ethics, And Appraisal Procedures Of The Uniform Standards Of Professional Appraisal Practice (USPAP).

CPA's - Why is a Certified Machinery and Equipment Appraisal important?

12 Reasons Why Your Clients NEED A Certified Machinery & Equipment Appraisal

  1. Converting From C Corp To S Corp - There should be an appraisal of the assets.
  2. 1031 Exchanges - Assets require a valuation for a like-kind exchange.
  3. ESOPS - Initial appraisals must start out with accurate values of tangible assets such as machinery/equipment. Book value is not accurate.
  4. Valuations - Book value is rarely accurate and usually different from Fair Market Value. If the machinery/equipment is not valued properly, the entire business valuation is skewed. Lots of risk and liability!
  5. Gifting - Requires an appraisal of the items becoming a gift.
  6. Estate Planning - Trusts and Wills require a value of the items.
  7. Liquidations - How do you effectively and profitably liquidate the assets?
  8. Sarbanes-Oxley - Tangible assets must be valued and substantiated.
  9. Buy/Sell Agreements - Partners need to know at the outset how machinery and equipment values will be determined.
  10. Financing - Establishes collateral value. The lender will need to have a Certified Machinery and Equipment Appraisal.
  11. Asset Allocation-set allocation for purchase/sale of a business.

Based on the Pension Protection Act of 2006 and Circular 230, the days of guessing or burying the value of capital equipment are over. Every day you are in contact with business owners that need a true and accurate fair market value for their capital equipment.

How do you determine a value?

  • Guess
  • Rely on book value?
  • Rely on the owner's word?
  • Rely on some non-certified person's word?

If you rely on guessing, book value, the owner's word or the word of a non-certified person, you are receiving an inaccurate determination of value. There is liability and risk that you and your client are taking if you rely on anything other than a Certified Machinery & Equipment Appraisal! After all, the IRS will disallow a value that is not substantiated and there could be penalties.

A CMEA is experienced in collecting, substantiating, reporting and determining a value that is consistent with USPAP (Uniform Standards of Professional Appraisal Practice). USPAP, promulgated by the Appraisal Foundation and Congress, is the authoritative source for appraisals.

You can rely with confidence on a determination of value that is substantiated and USPAP compliant. A Summary Machinery & Equipment Appraisal prepared by a CMEA should withstand the scrutiny of the IRS, courts, lenders and others.

Attorneys - Why is a Certified Machinery and Equipment Appraisal important?

Did you know that your client's machinery and equipment has a value that can substantiate, strengthen, or lose even the most successful case in court! After all, if you rely on a guess, a depreciation schedule, or an "uncertified" auctioneer or dealer to determine a value, it's inaccurate and will not hold up to scrutiny with the IRS, courts, or lenders.

How Can You Use An Accurate Value Of Your Client's Machinery & Equipment To Your Advantage?

There are at least 7 ways an accurate, substantiated, irrefutable and defensible value of machinery and equipment can be of help to you and your client. Here are some ways:

  • Loans / Leases / Property Taxes / Insurable Value
  • Divorce - Converting From C To S Corp - Cost Segregation
  • Taxes - 1031 Exchanges - Trust Agreements
  • Buy / Sell Agreements - Estate Planning - Bankruptcy
  • Retirement Planning - Partnership Dissolution - Strategic Planning
  • Litigation Support - GASB 34 - Sarbanes-Oxley
  • Collateral - Gifting

A Certified Machinery & Equipment Appraisal Arms You with An Irrefutable, Defensible, And Substantiated Value Of The Machinery & Equipment

What you need to prevail before the IRS, courts, lenders, attorneys, CPAs and others is a Certified Appraisal Report submitted by a Certified Machinery & Equipment Appraiser (CMEA). That way, you are assured you are receiving a report consistent with the Uniform Standards of Professional Appraisal Practice (USPAP), promulgated by Congress. In fact, the IRS may disallow a filing because there is not a Certified Appraisal Report that substantiates equipment values.

Business Owners, Business Sellers, Business Buyers - Why is a Certified Machinery and Equipment Appraisal important?

Avoid Buying Or Selling Your Machinery/Equipment Too Low Or Too High

Discover How You Can Arrive At A True And Realistic Value

Why Do You Need To Know The Value Of Your Machinery/Equipment?

As a business owner, at one time or another you will be faced with needing to know

What's Your Machinery/Equipment Really Worth? What do you do? Guess? Ask a friend? Go by book value? Unfortunately, guessing, friends and book values are risky and inaccurate. A Certified Machinery & Equipment Appraiser (CMEA) Gives You A Fair Realistic Independent Value You Can Rely Upon.

A CMEA professional has the expertise, certification and knowledge to conduct an independent third party machinery/equipment appraisal. Therefore, the value of any item is substantiated and reflects the realistic true market value of an item. In addition, each CMEA abides by the regulations and ethics of the Uniform Standards of Professional Appraisal Practice.

Why Would You Need a Certified Machinery and Equipment Appraisal?

Sellers need to know that they are not selling too low or pricing their machinery/equipment above the fair market value. Buyers want to know that they are not paying too much to purchase the machinery/ equipment.

In addition, for allocation purposes, the IRS requires buyers and sellers to agree on the value of tangible assets involved with a business transfer. They must "allocate" a particular value for tangible assets as well as goodwill.

A Certified Machinery/Equipment Appraisal holds up under scrutiny with courts, financial institutions, and other lenders. That's not all, business owners utilize a Certified Appraisal Report in connection with good business sense in the following areas ...

  • Divorce
  • Partnership
  • Buy/Sell Agreement
  • Estate Planning
  • 1031 Exchanges
  • Trust Agreements
  • Litigation
  • Tax Purposes
  • Business Valuations
  • Dissolution
  • Financing
  • SBA Loans
  • Insurable Value
  • Property Taxes
  • Retirement Planning

Rely on the expertise of a CMEA
(Certified Machinery and Equipment Appraiser).
It makes logical prudent business sense and eliminates your liability.

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