The recent Kress case indicates approval of S corp tax affecting, but the court was neutral on the issue of an S corp premium (see prior coverage). As to how far this decision goes toward ending the tax-affecting controversy, keep in mind that the Kress case is not a U.S. Tax Court memo or a precedent-making decision from a U.S. Court of Appeals. However, a pending case in Tax Court could bring more clarity to this matter. That case is the Cecil case, in which the valuation experts for both the taxpayer and IRS have tax affected the earnings of an S corp and applied an S corporation equity adjustment multiple (SEAM) that was calculated using the Van Vleet model. The trial was held in 2016, and a decision has been pending for three years. “Given the amount of time that has elapsed, I’m beginning to suspect that the Chief Judge of the Tax Court has ordered the opinion to be reviewed by the full Tax Court,” writes Daniel R. Van Vleet (The Griffing Group), the developer of the Van Vleet model, in the June issue of Business Valuation Update. Such a review is likely to happen if a draft opinion a trial judge issues overrules Tax Court precedent, Van Vleet points out. “If a full review has been ordered, this may be an optimistic sign that the Tax Court is prepared to reverse earlier decisions and allow S corp tax affecting so long as the analysis includes an S corp adjustment that reflects the valuation-related tax differences between C corps and S corps,” he says. (The pending Cecil case is William A. V. Cecil, Sr., Donor, et al. Petitioner(s) v. Commissioner of Internal Revenue, Respondent.)