The New Key Person Risk on Steroids: Personal Goodwill

BVResearch Pro
Training Event Transcripts
March 24, 2015
Lance Hall, ASA


This presentation will examine how key person risk increased from 5% to 15% discounts to 70% to 100% discounts, when called personal goodwill. In the Estate of Adell and Bross Trucking, the Tax Court, for the first time, took an income tax construct of personal goodwill and applied it to an estate (Adell) and a gift (Bross Trucking). As a result, the respective values of the two companies were reduced by 65% and 100%, respectively. The Tax Court’s adoption of personal goodwill has opened a Pandora’s Box of unintended consequences and opportunities for taxpayers to reduce the taxable portion of gifts and estates. This presentation will examine the income tax and marital dissolution background of personal goodwill, compare and contrast personal goodwill and key person risk, and introduce methodologies to determine personal goodwill.
The New Key Person Risk on Steroids: Personal Goodwill
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