An Amended Value Option (AV) is a tax-protected corporate home sale program where the company first establishes a baseline value through independent appraisals, then “amends” that value upward when your relocating employee secures a higher offer from an outside buyer. It’s the only home sale structure the IRS has specifically ruled on, which makes it the most defensible tax-protected option for companies that want maximum audit protection.

• The relocation management company (RMC) orders two independent appraisals to set a baseline value
• Your employee markets the home and accepts a bona fide outside offer at a higher price
• The RMC purchases the home from your employee at the amended (higher) price
• The RMC then sells the home to the outside buyer in a separate, second transaction
• All commissions and closing costs flow through the RMC as deductible business expenses, not taxable income to the employee

An Amended Value Option is a structured home sale program that combines elements of a Guaranteed Buyout with the cost efficiency of a market-driven sale. The relocation management company orders two independent appraisals up front to establish a baseline value, your employee markets the home, and when an outside buyer makes a higher offer, the original purchase price gets “amended” upward to match. The RMC then completes a two-transaction structure that preserves tax protection on all closing costs.

The IRS has specifically addressed Amended Value sales in formal guidance, which is something it has not done for Buyer Value Options or other home sale structures. That regulatory clarity is a significant part of why AV programs remain the gold standard for companies that want maximum protection against an adverse tax audit.

For your relocating employee, the AV process removes the financial burden of closing costs, eliminates the tax hit that comes with direct reimbursement, and gives them appraisal-based certainty as a backstop. For your company, AV delivers tax protection on the single largest expense in the relocation process.

How Does an Amended Value Sale Work?

Here’s how a typical AV transaction unfolds:

1. Your employee enrolls in the home sale program and connects with a certified ARC Relocation Counselor.
2. The counselor provides a list of qualified, ERC-certified appraisers in the market. Your employee selects appraisers from the list, and ARC orders two independent appraisals.
3. The appraisal, inspection, and title search processes complete within 30 calendar days of listing.
4. Your employee lists the home with a relocation-savvy real estate agent and receives marketing strategy support from their ARC counselor.
5. An outside buyer makes a bona fide offer at a price higher than the appraised value.
6. ARC reviews the offer to confirm it meets bona fide criteria. Your employee does not sign the offer at any point.
7. ARC purchases the home from your employee at the amended (higher) price established by the outside buyer’s offer.
8. Your employee receives their equity, vacates the home, and focuses on the new role.
9. ARC enters into a separate listing agreement and executes a second contract of sale with the outside buyer.
10. ARC pays all real estate commissions, closing costs, and transaction fees, then bills your company as a deductible business expense.

The two-transaction structure is what creates the tax protection. Because the RMC is paying closing costs as part of its own real estate transaction, those costs are treated as a business expense rather than taxable wages to the employee.

Amended Value vs. Buyer Value Option vs. Guaranteed Buyout

All three programs share the same underlying two-transaction structure, but they differ in how the home’s value gets established and how much risk the company takes on.

A BVO is the most cost-efficient option in active markets, but it relies on AV principles for tax protection rather than its own direct IRS ruling. A GBO offers the most certainty for the employee but the most risk and cost for the company. AV sits in the middle and provides the strongest combination of regulatory clarity and cost control.

The IRS and Amended Value: Why It’s the Preferred Tax-Protected Structure

The IRS has issued formal guidance on relocation home sale programs three times. Understanding that history is part of why companies with low audit-risk tolerance gravitate toward AV.

Revenue Ruling 72-339 (1972)

The IRS first addressed corporate home sale programs in 1972, ruling that an employer could lawfully purchase an employee’s home at market value and resell it without recognizing the acquisition and resale costs as compensation to the employee. This established the foundation for what would become the Guaranteed Buyout program. The key requirement was complete independence between the purchase from the employee and the sale to the outside buyer.

Private Letter Ruling 85-22002 (1985)

In 1985, the IRS issued a Private Letter Ruling that expanded the tax-protected scope to include Amended Value sales. As a private letter ruling, it applied only to the specific company that requested it, but it gave the relocation industry a working framework. For the next two decades, companies operating AV programs relied on this PLR and on industry-developed guidelines rather than a formal Revenue Ruling.

Revenue Ruling 2005-74 (2005)

After a formal industry request submitted in January 2004, the IRS issued Revenue Ruling 2005-74 on November 30, 2005. This ruling did four important things:

• Reaffirmed that an Appraised Value (GBO) buyout program qualifies for tax protection
• Confirmed tax protection for Amended Value programs that adhere to the 11 Key Elements (described in the ruling as “Situation 2”)
• Described a flawed AV program structure (“Situation 3”) that does not constitute two separate sales and lacks several of the 11 Key Elements
• Clarified that two deeds are not required from a federal tax perspective

Revenue Ruling 2005-74 didn’t directly address the Buyer Value Option, which is part of why BVO programs technically rely on AV principles for their tax protection rather than a ruling of their own. For companies that prioritize maximum audit defensibility, AV remains the most thoroughly validated structure.

The 11 Key Elements of a Compliant Amended Value Sale

The relocation industry developed the 11 Key Elements through Worldwide ERC to establish procedures that promote tax-protected status for AV transactions. Following all 11 is the strongest litmus test for IRS compliance.

1. Listing exclusion clause. Your employee’s listing agreement must include a clause that terminates the listing upon sale of the home to the employer or RMC, preserving the right to acquire the home without paying real estate commission.
2. No down payments. Under no circumstances may your employee accept a down payment from any potential buyer.
3. No signed offers. Your employee must never sign an offer presented by a potential buyer.
4. Binding contract of sale. Your employee enters into a binding Contract of Sale with the employer or RMC (the “Purchaser”).
5. Transfer of ownership burdens. After the Contract of Sale is executed and your employee has vacated, all burdens and benefits of ownership pass to the Purchaser.
6. Unconditional purchase. The Contract of Sale between your employee and the Purchaser at the amended price is unconditional and not contingent on any event, including the potential buyer obtaining a mortgage commitment.
7. No discretion over resale. Neither your employee nor the employer exercises any discretion over the subsequent sale of the home by the Purchaser.
8. Separate listing agreement. The Purchaser enters into a separate listing agreement with a real estate broker for the resale.
9. Separate sale agreement. The Purchaser enters into a separate agreement to sell the home to the outside buyer.
10. Direct title transfer. The Purchaser arranges for the transfer of title directly to the outside buyer.
11. Independent pricing. The price eventually paid by the outside buyer has no effect on the price paid to your employee.

Companies that deviate from these elements should expect tougher scrutiny in an IRS audit. The most compliant programs tend to be the most expensive to administer, but the cost of losing tax-protected status in an audit far exceeds the cost of getting the structure right up front.

What Qualifies as a Bona Fide Offer?

For an outside offer to trigger an Amended Value sale, it must qualify as a “bona fide” offer. ARC reviews every potential offer against the following criteria:

• No contingency on buyer’s home sale. The offer is not contingent on the buyer selling another property first.
• No unusual terms. The offer doesn’t include unusual or unreasonable conditions that could jeopardize closing.
• Standard financing. The offer isn’t subject to interim or special financing terms outside normal market practice.
• Net value at or above appraised value. The net value of the offer is equal to or higher than the appraised value, after accounting for any incentive payments and applicable deductions. Lower offers may still be considered with client approval.
• Pre-qualified buyer. The buyer is pre-qualified for financing and can show evidence of proof of funds for the down payment.
• Sufficient earnest money. The earnest money deposit is appropriate for the area and the property’s value.
• Consistent pricing. The offered amount is consistent with the appraisals and broker market analyses (BMAs).
• Employee never signs. Your employee did not sign the buyer’s offer agreement at any point in the process.

If an offer fails any of these criteria, ARC works with the listing agent and the outside buyer’s representative to correct the issue or determine whether the offer can be amended to qualify.

Amend From Zero vs. Amended Value: What’s the Difference?

The IRS Internal Revenue Manual draws a useful distinction between two related transaction types:

• Amended value sale. A sale that occurs when your employee receives a bona fide offer from a qualified buyer after the RMC has completed the appraisal process.
• Amend from zero sale. A sale that occurs when your employee receives a bona fide offer from a qualified buyer before appraisals are completed.

Both follow the same two-transaction structure and both can qualify for tax protection when the 11 Key Elements are followed. The practical difference is timing. An “amend from zero” scenario typically happens in fast-moving markets where a buyer surfaces almost immediately after listing. ARC handles both transaction types through the same compliance framework.

Tax Savings Example: AV vs. Direct Reimbursement

The cost difference between an AV program and direct reimbursement is significant. On a $500,000 home sale, here’s what the comparison looks like:

Direct Reimbursement Program

Amended Value Program

On a $300,000 home, the tax impact to the employee under direct reimbursement runs around $13,000. Multiply that across an annual relocation volume and the savings from a properly structured AV program reach into the hundreds of thousands.

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What IRS Auditors Look For in an AV Program

Since the issuance of Revenue Ruling 2005-74, the IRS has audited AV and BVO programs regularly. Patterns from those audits reveal what auditors focus on:

• Genuine separation of the two sales. Auditors look for evidence that the sale from your employee to the RMC and the sale from the RMC to the outside buyer are truly independent transactions.
• Sequence of events. The order in which contracts are executed, possession transfers, and titles are recorded matters. Compressed timelines that minimize the RMC’s period of beneficial ownership draw scrutiny.
• Inspection handling. Auditors are skeptical of programs that rely heavily on inspections to manage risk, since this can suggest the RMC is trying to avoid taking real ownership.
• Buyer contingencies. Contingencies should be satisfied before the AV sale is amended, not after.
• Never cancelling the AV sale. This is the single most important element. If the outside buyer falls through, the AV sale to the RMC must stand. Programs that cancel the AV sale when the outside buyer backs out are essentially shielding the company from financial risk, and the IRS treats this as evidence that the program lacks the genuine risk transfer required for tax protection.

A pattern of delaying the RMC’s possession of the home increases the likelihood of an adverse audit finding. The risk of loss represented in an unconsummated outside sale is exactly the evidence the IRS looks for to confirm a tax-compliant program.

Pros and Cons of an Amended Value Option

Pros

• The most thoroughly IRS-validated home sale structure available
• Allows your employee to capture market upside above the appraised value
• Provides an appraisal-based backstop if no outside offer materializes (when paired with a GBO sunset)
• Eliminates closing-cost tax liability for your employee
• Removes gross-up expense for your company
• Reduces relocation stress and improves time-to-productivity
• Strong alignment with Worldwide ERC compliance standards

Cons

• Requires more administrative coordination than a BVO due to the appraisal step
• Additional cost for two independent appraisals
• The company assumes beneficial ownership during the period between the two sales
• If the outside sale falls through, the company carries mortgage payments, utilities, and statutory compliance until a new buyer is found (industry data puts fall-through rates at less than 1%)
• Properly structured AV programs cost more to administer than less compliant alternatives, but the audit protection is worth the difference for most companies

What’s Included in ARC’s Amended Value Program

When you work with ARC on an Amended Value program, your employees get full-service support from listing through close:

• Initial consultation and policy review with a certified ARC Relocation Counselor
• Two independent ERC-certified appraisals ordered within one workday of appraiser selection
• Appraisal, inspection, and title search completion within 30 calendar days of listing
• Listing price guidance and competitive market analysis
• Real estate agent referrals from ARC’s vetted, relocation-trained network
• Marketing strategy development and listing optimization
• Bona fide offer review and qualification
• Contract review, including the listing exclusion clause and Contract of Sale with ARC
• Two-transaction closing management with full 11 Key Elements compliance
• Equity disbursement to your employee on vacate or contract execution, whichever is later
• All commission and closing cost payments handled directly by ARC
• 24/7 counselor availability, including evenings and weekends
• Detailed invoicing and reporting to your finance and mobility teams

Your employee never attends the closing with the outside buyer. ARC handles the second transaction remotely so your employee can focus on settling into the new role.

Why Companies Choose ARC for Amended Value Management

ARC has been managing tax-protected home sale programs for both private-sector clients and federal agencies for years. ARC is an approved home sale program provider to the United States Government under GSA Schedule 653-5, and ARC delivers AV and BVO services to employees relocating with several of the same federal agencies that regulate the relocation industry.

That federal vetting matters. ARC’s processes, technical capabilities, and compliance practices have all been reviewed and approved by GSA, which means the same rigor protects every private-sector client. ARC’s relocation counselors are trained on the full Worldwide ERC framework, the IRS regulatory history, and the specific audit-defense practices that keep AV programs compliant under scrutiny.

Every ARC counselor is reachable 24/7. Real estate transactions don’t always happen during business hours, and your employees need someone who can answer questions and review offers in real time, not on the next business day.

Frequently Asked Questions

What is an amended value sale in relocation?

An amended value sale is a corporate home sale program where the company sets a baseline value through independent appraisals, then amends that value upward when the relocating employee secures a higher offer from an outside buyer. The relocation management company purchases the home from the employee at the amended price and resells it to the outside buyer in a separate transaction.

What is the difference between amended value and buyer value option?

An Amended Value program uses two independent appraisals to set a baseline value before the home is listed, while a Buyer Value Option uses no appraisals and relies entirely on the outside buyer’s offer to establish value. AV is the only structure with a direct IRS Revenue Ruling, while BVO relies on AV principles for its tax protection.

Is an amended value sale taxable to the employee?

No. When the program is structured according to the 11 Key Elements and the requirements of IRS Revenue Ruling 2005-74, the closing costs are treated as a business expense paid by the company rather than taxable income to the employee. That tax protection is the entire point of the AV structure.

What IRS ruling governs amended value programs?

IRS Revenue Ruling 2005-74, issued on November 30, 2005, is the controlling authority. It builds on Revenue Ruling 72-339 (which addressed Guaranteed Buyout programs) and Private Letter Ruling 85-22002 (which first addressed AV transactions in 1985).

What are the 11 Key Elements of an amended value sale?

The 11 Key Elements are procedures developed by Worldwide ERC to establish tax-protected status for AV transactions. They require a listing exclusion clause, no employee-signed offers, a binding unconditional Contract of Sale with the RMC, complete separation of the two sales, and independent pricing between the employee sale and the outside buyer sale.

What is the difference between “amend from zero” and “amended value”?

An “amend from zero” sale happens when the employee receives a bona fide outside offer before appraisals are completed, while an “amended value” sale happens after appraisals are finished. Both transaction types follow the same two-sale structure and both can qualify for tax protection when the 11 Key Elements are followed.

What happens if the outside buyer falls through in an amended value sale?

The company takes beneficial ownership of the home until a new buyer is found, including responsibility for mortgage payments, utilities, and statutory compliance. Industry fall-through rates are typically less than 1%, and the AV sale to the RMC must stand even if the outside sale doesn’t close (cancelling the AV sale is one of the fastest ways to lose tax-protected status in an audit).

How long does an amended value sale take?

ARC completes the appraisal, inspection, and title search processes within 30 calendar days of listing. The total timeline depends on how quickly an outside buyer is found, but the AV process itself adds minimal time once a qualifying offer is received.