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15 Reasons Why an Accountant May Need a Certified Machinery & Equipment Appraisal (CMEA)

December 19, 2012

As an accountant, you can reduce the risk of liability when you rely upon a “qualified” USPAP compliant appraisal by a “qualified” appraiser. Specifically, you can rely with confidence on a Certified Machinery & Equipment Appraisal prepared by a Certified Machinery & Equipment Appraiser (CMEA).

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. Here are 15 reasons why you might need a CMEA:

  1. Converting From C To S Corp – A CPA typically requires an appraisal of the assets.
  2. 1031 Exchanges – One of the best kept secrets of the IRS. 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 usually not accurate.
  4. Valuations – Book value is probably not 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. Cost Segregation – Equipment values need to be substantiated.
  12. Divorces – The division of property will require an accurate, substantiated value by the court.
  13. Property Taxes – An excellent tool to prepare for a governmental authority to reduce and substantiate equipment values or substantiate the equipment is no longer owned by your client.
  14. Partnership Dissolution – The partners are splitting the sheets and a total equipment value will be required.
  15. IRS – The Pension Protection Act of 2006 requires a substantiated and certified equipment appraisal of the equipment.

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 will withstand the scrutiny of the IRS, courts, lenders, and others, and eliminate the risk of liability and possibly alleviate penalties.

The NEBB Institute endorses and strives to observe the highest standards of professional ethics to preserve the public trust inherent in the professional appraisal practice. The Institute provides initial and monthly comprehensive education, ongoing support, and a dynamic international network, and certifies professionals in the art of machinery/equipment appraisal and brokerage.

By: NEBB Institute

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