Wine Business Consulting, Forecasting and Analysis Services
American Viticultural Area Valuations
Did you know that, according to United States tax law, a vineyard site can consist of two separate assets, the land and the intangible asset associated with the site's AVA designation? The land asset, of course, may not be depreciated. The intangible asset, however, can be amortized over a 15 year period, so long as the site was acquired no earlier than 1993. This can provide a sizeable tax benefit and significantly increase post-tax earnings. For instance, if you acquire a $1.5M vineyard and 40% of the value is attributable to the AVA, then your income tax basis would be reduced by $40,000 per year. At a tax rate of 40%, this increases profitability and cash flow by $16,000 per year.
As of right now, the IRS has issued no guidelines as to how to calculate AVA value. VFA's valuation and grape price expertise provides vineyard owners with a trusted partner for valuing AVA worth. Our methodology is on the cutting-edge of AVA valuations, providing what we believe to be the most accurate and well-justified appraisals available right now.
What sets us apart? See below for an explanation of why our AVA appraisals are superior to the rest:
Financial-Based Asset Valuation
VFA uses past and pro forma financials to value the relevant assets. The ultimate worth of an asset is its ability to generate financial benefit to the owner of the asset. By measuring this worth, VFA can provide you with an AVA asset valuation based upon the same principles used by your CPA or by mergers and acquisitions professionals.
Many other AVA appraisers use highly subjective methodologies, such as comparisons with out-of-appellation properties that are imprecise and suffer from weak links in the comparison logic.
These methodologies lead to lower and weaker valuations. By relying on standard principles of financial analysis and rigorous use of quantitative data, VFA can provide you with rock-solid AVA valuations for your tax return.
Data-Driven Validation
Tax write-offs must be justifiable to the IRS. All of VFA's assumptions and calculations are based upon solid logic and, most importantly, solid data. Fact-based, data-driven valuations leave the least room for dispute regarding an asset's value.
At the core of our methodology is an emphasis on incontrovertible evidence and rigorous statistical analysis to prove that our valuations meet the highest standards in the industry.
Deep, Industry Expertise
VFA's AVA valuations are informed by advanced, proprietary grape price forecasting techniques and proprietary models for accurately estimating past, present and future grape prices.
Even CPAs often rely on straight-line price projections for grape prices. These projections - fundamental to proper asset valuation - are impractical and inadequate for an industry as cyclical and volatile as ours. VFA, on the other hand, is the only entity forecasting grape prices with the confidence to make them available to the public.