Double Wandry Technique to Transfer Assets Without Appraisal

A Wandry clause or mechanism is t technique to reduce the risk of an adjustment to a gift tax return based on a valuation difference. If the IRS says the value of a gift was double your appraised value you could owe substantial gift tax. In the Wandry case the taxpayer successfully transferred a fixed dollar value of entity interests, not a percentage interest (or number of shares in the case of a corporation). So, when the IRS disputed that the value was too low, the mechanism contained in the legal transfer documents adjusted the percentage membership interests sold to equal the fixed dollar amount that was transferred, based on the gift tax value as finally determined. If you need to make a transfer quickly and don’t have a final appraisal number you might be able to use a double or two tier Wandry. Applying this concept you would make a transfer of a fixed dollar amount as in a typical Wandry but using whatever estimate you can obtain. The first tier of adjustment is when the final appraisal value is received you adjust the membership (or other) interests based on that value. The second tier, the “double” is the standard Wandry adjustment in case of a later gift tax audit adjustment. The purpose of this technique is to accelerate the time frame in which you can complete a transfer when you don’t yet have an appraisal.