Distinguishing Gross, Tax Court adopts tax-affected valuation of PTE
In an ingenious move, the U.S. Tax Court, ruling on an Oregon gift tax dispute, accepted the taxpayers’ tax-affected valuations of pass-through entities (PTE) without overturning Gross.
Court whittles down damages in Vinoskey ESOP case
The trial court recently unequivocally sided with the Department of Labor in its liability findings against the defendants in the Vinoskey ESOP case, but the court made adjustments to the DOL’s damages calculation that reduced the liability to the defendants considerably.
Trial court favors DOL in Vinoskey ESOP trial
In the closely watched Vinoskey ESOP litigation, the trial court recently issued a long decision that found all the defendants liable.
Estate of Aaron Jones v. Commissioner
In gift tax dispute, Tax Court adopts estate expert’s valuation of two related PTEs, including expert’s tax affecting; court distinguishes Gross and later cases; issue is not whether to tax affect but how; estate expert’s tax affecting was “more accurate than [IRS’] blunt zero-rate approach.”
Keeping Gross Alive, Nimble Tax Court Accepts PTE Tax Affecting
In gift tax dispute, Tax Court adopts estate expert’s valuation of two related PTEs, including expert’s tax affecting; court distinguishes Gross and later cases; issue is not whether to tax affect but how; estate expert’s tax affecting was “more accurate than [IRS’] blunt zero-rate approach.”
Expert comments on Vinoskey ESOP ruling
ESOP appraisers are questioning the technical aspects of the Vinoskey and Brundle rulings and asking what the recent rulings may mean for the future of employee ownership plans.
Strong win for DOL in Vinoskey ESOP trial
Difficult times for the ESOP community.
Acosta v. Reliance Trust Co.
In DOL’s overpayment case against company directors and ESOP trustee, court denies directors’ pretrial motion for dismissal of case, finding DOL advanced “plausible” case theories; court also finds ESOP defendants have no right to indemnification from estate of late owner/seller of company shares.
In ‘Overpriced ESOP Insider Transaction Case,’ Defendants’ Pretrial Motion for Indemnification Fails
In DOL’s overpayment case against company directors and ESOP trustee, court denies directors’ pretrial motion for dismissal of case, finding DOL advanced “plausible” case theories; court also finds ESOP defendants have no right to indemnification from estate of late owner/seller of company shares.
Remy v. Lubbock Nat’l Bank
In ESOP case, court finds ERISA provides for right to contribution among co-fiduciaries but finds trustee defendant has no right to contribution from nonfiduciary ESOP appraiser if trustee were found liable to ESOP for losses; court dismisses third-party complaint against ESOP appraiser.
Trustee’s Claim for Contribution Against ESOP Appraiser Collapses
In ESOP case, court finds ERISA provides for right to contribution among co-fiduciaries but finds trustee defendant has no right to contribution from nonfiduciary ESOP appraiser if trustee were found liable to ESOP for losses; court dismisses third-party complaint against ESOP appraiser.
Lee v. Argent Trust Co.
Court dismisses private plaintiff’s ESOP suit, alleging defendant trustee and other ESOP and company actors violated their fiduciary duties to the plan and overpaid for company stock; a subsequent valuation showed the plan obtained stock at a discount, court concludes.
Court Finds Plaintiff Fails to Show ESOP Transaction Caused Injury
Court dismisses private plaintiff’s ESOP suit, alleging defendant trustee and other ESOP and company actors violated their fiduciary duties to the plan and overpaid for company stock; a subsequent valuation showed the plan obtained stock at a discount, court concludes.
DOL Prevails on All Claims Against ESOP Trustee and Owner/Seller
Trial court finds ESOP trustee liable for causing plan to overpay for company stock; trustee failed to adequately respond to red flags in ESOP appraisal and did not act solely in the interest of ESOP, court says; owner is liable for accepting price he knew to be above stock’s fair market value.
Pizzella v. Vinoskey (I)
Trial court finds ESOP trustee liable for causing plan to overpay for company stock; trustee failed to adequately respond to red flags in ESOP appraisal and did not act solely in the interest of ESOP, court says; owner is liable for accepting price he knew to be above stock’s fair market value.
Inclusion of Betas in CCPro Platform Puts the Spotlight on the IRP
Two sources of industry betas are now included in BVR’s Cost of Capital Professional (CCPro) to help in estimating the industry risk premium (IRP) component of the buildup method for developing the cost of capital for a private company. For appraisers that choose to use an IRP, care must be taken and there are some important factors to consider.
Determining the FMV of Small Privately Held Promissory Notes
The appraisal of promissory notes is an area of business valuation that has not received much attention from academic journals. Appraisers are taught to use corporate bonds as comparable investments, but they are much too large and marketable to be used as a proxy for most privately held promissory notes. This article introduces the concept of using Business Development Company (BDC) rates to value small promissory notes.
More than one valuation issue in Kress
Tax affecting is only one issue that makes the federal district court’s opinion in Kress a must-know for valuators, notwithstanding a recent reader comment that it’s doubtful the case would have received much attention had it not been for the tax-affecting angle.
Reader comment on Kress case coverage
Responding to the attention the Kress case has received (at BVR and elsewhere), Harry Fuhrman, financial analyst with the Internal Revenue Service, gave us the following comments.
DOL sticks to its tough ESOP litigation strategy
Despite criticism from the ESOP community, the Department of Labor is not abandoning its litigation-prone approach toward ESOPs, as a recently filed lawsuit makes clear.
Appreciation in Liquor Company’s Value Represents Marital Property, Appeals Court Finds
Appeals court upholds ruling that appreciation in value of husband’s interest in family liquor business is marital asset; trial court carefully analyzed husband’s role in company to find he “substantially contributed” to the increase and husband stipulated to wife’s substantial contribution.
Hall v. Hall
In discovery dispute, appeals court says trial court’s protective order in favor of medical practice is too broad; nonowner spouse may obtain information shedding light on value of owner spouse’s ownership interest; operating agreement requiring use of book value may not be controlling here.
Medical Practice Must Produce Information Bearing on Spouse’s Ownership Value
In discovery dispute, appeals court says trial court’s protective order in favor of medical practice is too broad; nonowner spouse may obtain information shedding light on value of owner spouse’s ownership interest; operating agreement requiring use of book value may not be controlling here.
Kress appeal still a possibility
As the valuation community ponders the reach of the recent Kress decision, many eyes are trained on the government’s next move.
Court Says Expulsion Price Determination in Louisiana Buyout Dispute Is Triable Issue
In buyout dispute resulting from expulsion of LLC member, court finds state law does not preclude use of discounts in valuing withdrawing LLC member’s interest; company’s operating agreement is ambiguous on how to value expelled member’s interest, court says, leaving issue for jury to decide.