Denial, Anger, Bargaining, Depression, and, Finally, Acceptance of Tax Affecting

BVWireIssue #45-2
June 14, 2006

Perhaps it’s a bad sign that, during BVR’s teleconference last week, George Hawkins (Banister Financial, Charlotte, NC) referred to Kubler-Ross’ five stages of grief when summarizing the BV profession’s response to tax affecting as a result of the Gross case. The good news, he concludes, is that “we’ve moved beyond the ‘should we or shouldn’t we’ stage. The answer, many of us now agree, is a definite ‘yes’.”

Several experts have proposed and tested methodologies for documenting the impact of pass-through tax benefits on value—Roger Grabowski, Chris Mercer, Chris Treharne, and Dan Van Vleet, among others. Nancy Fannon (Fannon Financial Group, Portland ME) stressed that, while the approaches differ, there’s a building consensus of key factors in all the models. Further, Michael Paschall (Banister Financial) and Dan Van Vleet (Duff & Phelps) confirmed that these methods can all pass Daubert challenges (though Dan makes a strong point for the relative simplicity of describing his SEAM method in the courtroom).

“You have to provide analysis in your valuation reports on how you handled this issue,” says Hawkins. “The IRS is only going to get to get tougher on this.”

To order a CD or transcript of the session, or to sign up for BVR’s August 15th teleconference on the AICPA BV Standards (with panelists Ron Seigneur, Jay Fishman, Ed Dupke, and Tom Hilton), go to

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