Soft Drink Bottlers
This U.S. industry comprises establishments primarily engaged in manufacturing soft drinks and artificially carbonated waters.
Walsh v. Vinoskey
This case covered the appellate decisions regarding the well-publicized Vinoskey ESOP case. The appellate court affirmed the district court in deciding that the company owner had extensive knowledge about the company and its prior valuations, and thus it was plausible to infer that “something was off.” There was no clear error in the district court finding that the owner violated ERISA. The appellate court also allowed an offset to damages for the debt the owner forgave.
Court Affirms Violation of ERISA but Allows Offset of Debt Forgiveness in Determining Damages
This case covered the appellate decisions regarding the well-publicized Vinoskey ESOP case. The appellate court affirmed the district court in deciding that the company owner had extensive knowledge about the company and its prior valuations, and thus it was plausible to infer that “something was off.” There was no clear error in the district court finding that the owner violated ERISA. The appellate court also allowed an offset to damages for the debt the owner forgave.
Innovation Ventures, L.L.C. v. Custom Nutrition Labs., L.L.C.
This case involves a consideration of motions by both the plaintiff and the defendant to exclude the testimony of the other party’s expert witness on the basis of Daubert and the Federal Rules of Evidence. The plaintiff’s expert offered testimony on how to calculate lost profits based on the plaintiff’s market share. The defendant’s expert offered testimony as to weaknesses in the plaintiff’s calculations and opinions on damages. The court denied both of these cross-motions.
The District Court Refuses to Throw Out Experts Under Daubert Motions, Citing Differences in Admissibility and Scrutiny Under Cross-Examination
This case involves a consideration of motions by both the plaintiff and the defendant to exclude the testimony of the other party’s expert witness on the basis of Daubert and the Federal Rules of Evidence. The plaintiff’s expert offered testimony on how to calculate lost profits based on the plaintiff’s market share. The defendant’s expert offered testimony as to weaknesses in the plaintiff’s calculations and opinions on damages. The court denied both of these cross-motions.
Coca-Cola Co. v. Comm'r
Coca-Cola had been applying a transfer pricing method called the 10-50-50 since it entered into a closing agreement with the IRS in 198, covering the years 1987 to 1995. Coca-Cola had consistently followed that transfer pricing method; the IRS had audited Coca-Cola annually and “signed off” on that transfer pricing method for over a decade. Upon examination of Coca-Cola’s tax returns for 2007 to 2009, the IRS determined that Coca-Cola’s transfer pricing methodology did not reflect arm’s-length norms because it overcompensated the supply point and undercompensated Coca-Cola. The IRS reallocated income between Coca-Cola and its supply points employing the comparable profits method (CPM) pursuant to Reg. Sec. 1.482-5. The IRS increased Coca-Cola’s taxable income by over $9 billion assessing over $3 billion in additional taxes!
2020’s Most Important Transfer Pricing Case—Coca-Cola
Coca-Cola had been applying a transfer pricing method called the 10-50-50 since it entered into a closing agreement with the IRS in 1986, covering the years 1987 to 1995. Coca-Cola had consistently followed that transfer pricing method; the IRS had audited Coca-Cola annually and “signed off” on that transfer pricing method for over a decade. Upon examination of Coca-Cola’s tax returns for 2007 to 2009, the IRS determined that Coca-Cola’s transfer pricing methodology did not reflect arm’s-length norms because it overcompensated the supply point and undercompensated Coca-Cola. The IRS reallocated income between Coca-Cola and its supply points employing the comparable profits method (CPM) pursuant to Reg. Sec. 1.482-5. The IRS increased Coca-Cola’s taxable income by over $9 billion assessing over $3 billion in additional taxes!
Court Relies on DCF to Derive Value of ‘Sui Generis’ Company
NY court rejects comparable analyses to value “truly incomparable” beverage company and relies solely on DCF; court says the fact that expressions of interest to buy the company never became bona fide offers indicates liquidity risk and supports 25% DLOM.
Failure to Specify Offset Value Does Not Preclude Expert’s Admissibility
In contract dispute, court finds defendant expert’s testimony regarding offset value of new equipment plaintiff installed in reliance on contract is relevant under Daubert even though expert fails to state precise monetary benefit to plaintiff.
Ferolito v. AriZona Beverages USA LLC
NY court rejects comparable analyses to value “truly incomparable” beverage company and relies solely on DCF; court says the fact that expressions of interest to buy the company never became bona fide offers indicates liquidity risk and supports 25% DLOM.
Dominion Liquid Technologies, LLC v. GT Beverage Co., LLC
In contract dispute, court finds defendant expert’s testimony regarding offset value of new equipment plaintiff installed in reliance on contract is relevant under Daubert even though expert fails to state precise monetary benefit to plaintiff.
Industry and I-Banking Expert Admits Even He Wouldn’t Rely on His Own Report
Court strikes lost profits calculations for new energy drink distributor because the expert, an industry consultant/investment banker, failed to use scientific methods, market surveys, or reliable benchmark data.
The Citrilite Co. v. Cott Beverages, Inc.
Court upholds regression analysis of cumulative data sets under Daubert but strikes portions of expert’s damages calculations that project lost profits beyond stated contract term.
R&R International v. Manzen, LLC
Court strikes lost profits calculations for new energy drink distributor because the expert, an industry consultant/investment banker, failed to use scientific methods, market surveys, or reliable benchmark data.
Damages Experts Lose the Daubert Battle in Deposition
Court excludes plaintiff’s financial and marketing experts at trial for failing to support lost profits damages evidence with reliable market sales data.
Compania Embotelladora del Pacifico, S.A. v. Pepsi Cola Co.
Court excludes plaintiff’s financial and marketing experts at trial for failing to support lost profits damages evidence with reliable market sales data.
A Gross Result in the Gross Case Calls Into Question Circumstances in Which Tax Affecting Is Valid
Appraisers may soon have to defend their tax affecting in prior S corporation valuations as a result of Gross.
Daubert Issue Rears Its Ugly Head in Gross Case
George Hawkins wrote a guest abstract of this case in the January 2002 issue of Shannon Pratt's Business Valuation Update focusing on the tax affecting issues in the case.
Gross v. Commissioner (II)
Issues involved tax affecting of the discounted cash flows of the company and the size of the marketability discount.
0% Reduction for Tax Affecting Affirmed
The 6th Circuit affirmed the Tax Court’s valuation of gifted minority interests in a closely held S corporation.
Not Necessary to Tax Affect Pepsi Bottler S Corp Earnings
Petitioners in this case were gifted a total of 373.5 shares of common stock out of 19,680 outstanding shares in G&J Pepsi-Cola Bottlers Inc. (an S corporation) from their parents, and each filed a Form 709 (United States Gift and Generation Skipping Transfer Tax Return) in a timely manner.
Gross v. Commissioner (I)
Business Valuation and Taxes: Procedure, Law and Perspective ...
Estate of Mary D. Maggos (Maggos I) v. CIR
The Tax Court rejected taxpayer's motion for summary judgment on gift tax liability resulting from a redemption of a majority interest in a corporation's stock. The transaction left the decedent's son as the sole shareholder of the corporation. The IRS d ...
Independent Appraisal Needed to Overcome Presumption of Donative Intent
The Tax Court rejected taxpayer's motion for summary judgment on gift tax liability resulting from a redemption of a majority interest in a corporation's stock.
Estate of Bruce v. Commissioner
Issue is whether, as a result of sale and redemption of stock of closely held corporation, Shirley A. Bruce made a taxable gift to her son and daughter-in-law, and if so, in what amount.