AVW webcast features the Connelly case
Charles Persing (Bedersen LLP) appeared on the November edition of NACVA’s Around the Valuation World (AVW) webcast to discuss the Connelly case that came out this past June.
Discount on assets transferred shortly before death raises red flag
Family limited partnerships (FLPs) are popular tax-saving vehicles in estate planning because of the valuation discounts that are allowed.
Connelly Lesson: A Good Buy-Sell Is Not Enough to Fix Value
Some insights on the Connelly U.S. Supreme Court case from exit planner Paul Hood and attorney Ed Morrow. In the case, the estate of a deceased owner got hit with tax penalties due to trouble over the buy-sell agreement and mandatory redemption on death that was funded with life insurance.
Court-appointed attorney can’t testify on stock gift valuation
In a Hawaii estate matter, one of the founders of the Foodland grocery chain made lifetime gifts of company stock to some of her children.
Valuation Considerations for Gift & Estate Tax
The transfer of estate assets from one generation to another can be complex depending on the business and personal holdings of the estate. The valuation of such is essential to the determination of the taxable portion of the estate and calculating the applicable estate tax exemption. Our valuation team will demystify the valuation process by discussing the aspects that go into the appraisal of the material assets of an estate, including any/all intangible assets, machinery ...
Sullivan v. Loden (II)
The U.S. District Court in this case excluded the value of an attorney who was appointed in a related state probate case and testified that the defendant’s valuations were unreliable. The district court determined that the proposed witness was not qualified to testify as to the efficacy of valuations. This case concluded that just because a proposed witness was an “attorney” “respected” as an estate expert did not make him or her qualified under Rule 702 to testify about business valuations when the proposed witness was not qualified in business valuation.
U.S. District Court (Hawaii) Excludes Testimony on Business Value From an Attorney Who Has No Valuation Skills
The U.S. District Court in this case excluded the value of an attorney who was appointed in a related state probate case and testified that the defendant’s valuations were unreliable. The district court determined that the proposed witness was not qualified to testify as to the efficacy of valuations. This case concluded that just because a proposed witness was an “attorney” “respected” as an estate expert did not make him or her qualified under Rule 702 to testify about business valuations when the proposed witness was not qualified in business valuation.
Estate of Anne Milner Fields v. Comm'r
Importance: While this case was a memorandum decision and did not, therefore, set precedent, it was still a warning to estate planners that last-minute transfers of property from an individual prior to death must have real, verifiable, and justifiable nontax purposes. The Tax Court noted that the timeline (i.e., shortly before the decedent’s death) cast significant doubt on the transactions.
Transfers of Decedent’s Properties by Nephew Shortly Before Death Were Not a Bona Fide Sale for Adequate and Full Consideration
While this case was a memorandum decision and did not, therefore, set precedent, it was still a warning to estate planners that last-minute transfers of property from an individual prior to death must have real, verifiable, and justifiable nontax purposes. The Tax Court noted that the timeline (i.e., shortly before the decedent’s death) cast significant doubt on the transactions.
American Society of Appraisers (ASA) 2024 International Conference
I had the pleasure of attending the 2024 ASA International Conference in Portland, Ore., September 15 to 19. This was my first time to visit Portland, Ore., and I found it to be a very pleasant and attractive place to be. The conference was held at the Downtown Hilton in Portland.
Gregory Reveals What’s Going on With the IRS and Tax Valuations
At the recent New York State Society of CPAs’ Business Valuation and Litigation Services Conference, former IRS manager Michael Gregory (Michael Gregory Consulting) did a session on valuations for tax purposes and what’s been happening at the IRS. The article includes a chart on DLOM methods to consider for various types of entities and situations based on IRS feedback.
Handy tool: the buy-sell options grid
In the wake of the Connelly case, the order of the day for valuation experts is to get involved in the review of buy-sell agreements.
Exit Planning: Helping Business Owners Increase Value and Liquidity
The role of business valuation practitioners often ends once they opine on the value of a company and share this conclusion with their client. For most clients, knowing the value of their business is only part of the challenge. They often also need to know whether this value is enough to fund their next act, and, if not, what they can do to increase business value. This webinar will introduce you to a framework to ...
SCOTUS Decides Valuation of Corporate-Owned Life Insurance
In a unanimous decision, the United States Supreme Court sided with the 8th Circuit and ruled that the life insurance proceeds payable to a corporation that was to be used to redeem the deceased shareholder’s stock should be included in the deceased’s estate when calculating the value of the stock the deceased owned. The redemption liability did not offset the life insurance proceeds. This article is a summary of the decision and some observations.
SCOTUS sides with IRS in COLI valuation dispute
The U.S. Supreme Court has unanimously sided with the 8th Circuit and ruled that company-owned life insurance (COLI) proceeds used to redeem the deceased shareholder’s stock should be included for purposes of valuing the corporation for estate tax purposes.
Connelly v. United States (II)
The U.S. Supreme Court took on this case because of a split between two circuit courts. In the first case, Blount v. Commr., the 11th Circuit Court of Appeals reversed the Tax Court and excluded the insurance proceeds that accrued as a result of the death of the shareholder. In the Connelly case, the Tax Court once again included the insurance proceeds in the estate. The 8th Circuit affirmed the Tax Court, and the Supreme Court now unanimously affirmed the 8th Circuit, thus negating the decision of the 11th Circuit in Blount.
U.S. Supreme Court Affirms Inclusion of Corporate-Owned Life Insurance in Value of Company for Estate Tax Purposes
The U.S. Supreme Court took on this case because of a split between two circuit courts. In the first case, Blount v. Commr., the 11th Circuit Court of Appeals reversed the Tax Court and excluded the insurance proceeds that accrued as a result of the death of the shareholder since there was a binding liability to pay the proceeds to the estate of the decedent. In the Connelly case, the Tax Court once again included the insurance proceeds in the estate. The 8th Circuit affirmed the Tax Court, and the Supreme Court now unanimously affirmed the 8th Circuit, thus negating the decision of the 11th Circuit in Blount.
SCOTUS struggles with COLI valuation case
Last week, the U.S. Supreme Court heard oral arguments in the Connelly case, which involves the question of how corporate-owned life insurance (COLI) designed to fund the redemption of a deceased shareholder’s stock impacts the fair market value of the subject company and the value of the decedent’s gross estate.
Live today! SCOTUS arguments in the COLI valuation case
A live audio feed of oral arguments to the U.S. Supreme Court in the Connelly case will be broadcast today, March 27.
COLI valuation case now on SCOTUS’ calendar
March 27 is the date the U.S. Supreme Court will hear arguments in the Connelly case, according to the court’s calendar.
What Valuers Should Do While SCOTUS Mulls Connelly
Regardless of how the U.S. Supreme Court rules in the Connelly case, there are some steps valuers can take to better help their client business owners, many of whom could be sitting on ticking time bombs. The issue before SCOTUS is how does corporate-owned life insurance designed to fund the redemption of a deceased shareholder’s stock impact the fair market value of the subject company and the value of the decedent’s gross estate.
Valuation Impact of Corporate-Owned Life Insurance on SCOTUS’ Agenda
The goal of this paper is to inform readers about a valuation issue that is the subject of a petition put before the United States Supreme Court to resolve a circuit split. The issue is how does corporate-owned life insurance designed to fund the redemption of a deceased shareholder’s stock impact the fair market value of the subject company and the value of the decedent’s gross estate. The author examines the applicable U.S. Tax Court, district court, and two appellate decisions so the reader can understand the arguments made and the basis for the legal conclusions.
Connelly case kicks off Heckerling conference
At the Heckerling Institute on Estate Planning in Orlando, Fla., earlier this month, the first session was a panel on key court cases of 2023, and “valuation was top of mind for many federal courts,” according to coverage in WealthManagement.com.
Business Valuation Update Yearbook, 2024 Edition
January 2024 PDF, Softcover (401 pages)
BVR (editor)
Business Valuation Resources, LLC
Business Valuation Case Law Yearbook, 2024 Edition
January 2024 PDF, Softcover (222 pages)
BVR (editor)
Business Valuation Resources, LLC