At the annual business valuation conference hosted by the New York State Society of CPAs (NYSSCPA) in New York City, Nancy Fannon (Meyers, Harrison & Pia) challenged the traditional notions about the differences in value between a pass-through entity and the public-market C corporation. She presented research showing that shareholder-level taxes affect a firm’s value. The IRS and the Tax Court have refuted this conclusion, largely because the research has never been presented to support it. Fannon provides a suggestion for a new, more direct approach to pass-through entity valuation, which is included in a groundbreaking new book, Taxes and Value: The Ongoing Research and Analysis Relating to the S Corporation Valuation Puzzle, that she co-authored with Keith Sellers (University of Denver). Fannon touched on the new IRS job aid on S corp valuation (available at www.scorpvalue.com). In terms of general valuation concepts, she agrees with the job aid. But academic research does not support some substantive underlying assumptions made in the job aid, she says. One of these assumptions is that personal income taxes paid by the holder of an interest in an S corp “are not relevant” in determining the fair market value of that interest. “The academic research presented in our book presents very compelling evidence that personal-level taxes paid by the holder of an interest are very relevant to the prices paid in the marketplace,” she says.