Court of Appeals Upholds Tax Court—Taxpayer Gifted a Percentage of Partnership Interests, Not a Fixed Amount
Taxpayer appealed a Tax Court ruling that she gifted a percentage of partnership interests and not a fixed amount of value. As a result, when the IRS determined the FMV of those interests, the Taxpayer was left with a gift tax deficiency.
Experts in landmark ESOP valuation case give the inside story
For over a decade, the Department of Labor has not lost a major ESOP case on a valuation issue, but its winning streak ended with Walsh v. Bowers.
Insurer not required to defend valuation firm in ESOP lawsuit
A valuation firm can no longer force its professional liability insurer to defend a lawsuit challenging the firm’s ESOP valuation because the case’s surviving claim falls under a policy exclusion, a federal court has ruled.
BV News and Trends September 2021
A monthly roundup of key developments of interest to business valuation experts.
Insiders Examine Michael Jackson Estate Valuation Dispute
Testifying experts for the estate give their main takeaways from this fierce dispute with the IRS.
Major win in ESOP valuation case vs. DOL
A district court has ruled “decisively” against the Department of Labor (DOL) in an ESOP valuation case, stressing that the DOL failed to follow standard valuation practices.
Expelled partner should get FMV—but of what?
An Oregon appellate case deals with compensation for a partner’s 25% interest in a business after he is expelled from the firm.
Walsh v. Bowers
A district court has ruled “decisively” against the Department of Labor (DOL) in an ESOP valuation case, stressing that the DOL failed to follow standard valuation practices.
District Court Rules ‘Decisively’ Against the DOL in an ESOP Overvaluation Case
The Department of Labor sued the defendants, which included two individual owners, Bowers & Kubota Consulting Inc. and the Bowers & Kubota ESOP, alleging that the defendants had violated ERISA laws by manipulating data to induce the ESOP to pay $40 million for the shares of the individual shareholders that the DOL claimed was in excess of the fair market value of the shares. After extensive testimony of valuation experts and analysis of the facts of the case, the court determined that no ERISA violations have been established.
Cheng v. Coastal Lb Assocs.
This case concerned the purchase of minority interests in a California limited liability company under the Corporate Code concerning the purchase of these interests in lieu of a liquidation of the company. The appellate court affirmed the trial court’s order confirming the purchase of these interests at a discounted fair market value.
California Court of Appeal Allows a Discount for Lack of Control in the Buyout of 25% Interests in an LLC
This case concerned the purchase of minority interests in a California limited liability company under the Corporate Code concerning the purchase of these interests in lieu of a liquidation of the company. The appellate court affirmed the trial court’s order confirming the purchase of these interests at a discounted fair market value.
BV News and Trends August 2021
A monthly roundup of key developments of interest to business valuation experts.
Pourmoradi v. Gabbai
This California appellate case reviewed the trial court’s decision that discounts for lack of control and lack of marketability were not appropriate in determining the value to be paid to the plaintiffs in this corporate dissolution case where the remaining 50% owners exercised their right to purchase the plaintiff’s 50% interest in the LLC.
California Appellate Court Remands for Application of Trial Court of Wrong Standard of Value Denying Discounts
This California appellate case reviewed the trial court’s decision that discounts for lack of control and lack of marketability were not appropriate in determining the value to be paid to the plaintiffs in this corporate dissolution case where the remaining 50% owners exercised their right to purchase the plaintiff’s 50% interest in the LLC.
Michael Jackson estate valuers give rare inside look
Experts for the estate of pop superstar Michael Jackson presented a fascinating look at how the valuations were done for the “tax trial of the century” in a BVR webinar.
Interesting question on the Michael Jackson case
There were three main valuation matters in the case of the Michael Jackson estate versus the IRS, and the estate prevailed in two of them (see our most recent coverage here).
Michael Jackson case featured on BVR ‘power panel’ July 27
Experts involved in the high-profile case involving the Michael Jackson estate versus the IRS will discuss the contentious valuation issues in the case during a BVR webinar, Power Panel: Estate of Michael J. Jackson v. Commissioner.
Tax Court resists tax affecting in Michael Jackson case
Although the U.S. Tax Court recently handed the Michael Jackson estate a decisive victory regarding the estate’s tax liability, the court did not side with the estate on tax affecting, an issue that has preoccupied valuators, many of whom are proponents of the practice, for a long time.
In Jackson case, Tax Court dismisses IRS expert’s revenue projections as ‘simply not reasonable’
When Michael Jackson died, his image and likeness was besmirched, and yet, once competent executors took charge, they were able to make a lot of money for the estate in the immediate post-death years.
Dipak Patel v. Siddhi Hospitality, LLC
This case dealt with compensation for a partner’s 25% interest in a business after he was expelled from the business. The appellate court remanded the case to the trial court for a recalculation of the compensation without the inclusion of discounts for lack of control and lack of marketability. The trial court allowed those discounts on the theory that the expelled partner was to receive the fair market value of his 25% interest in the entity. The appellate court determined that the operating agreement required him to be compensated for 25% of the FMV of the assets of the LLC and not the FMV of his 25% in the LLC entity.
Oregon Appellate Court Disallows Discounts for Lack of Control and Lack of Marketability
This case dealt with compensation for a partner’s 25% interest in a business after he was expelled from the business. The appellate court remanded the case to the trial court for a recalculation of the compensation without the inclusion of discounts for lack of control and lack of marketability. The trial court allowed those discounts on the theory that the expelled partner was to receive the fair market value of his 25% interest in the entity. The appellate court determined that the operating agreement required him to be compensated for 25% of the FMV of the assets of the LLC and not the FMV of his 25% in the LLC entity.
Connecticut Supreme Court clarifies double-counting rule
In a recent decision, the Connecticut Supreme Court clarified this jurisdiction approach to double counting (or double dipping).
Personal v. Enterprise Goodwill in Florida Divorce Cases: What the Appellate Courts Say
In the wake of the recent King case, this is an analysis of marital dissolution case law from the Florida Supreme Court and the five District Courts of Appeal (DCA) of Florida that relates to the valuation of personal and enterprise goodwill in that state.
Tax Court issues highly anticipated ruling in Michael Jackson case
In the long-running litigation between the estate of the late megastar Michael Jackson and the Internal Revenue Service, the U.S. Tax Court recently issued its opinion on the value of Jackson’s image and likeness, as well as the value of his interest in two music publishing assets. Overall, this much-anticipated decision is a major win for the Jackson estate. The court’s momentous decision includes an expansive analysis of the rivaling valuation testimony.
Tax Court resists tax affecting in Michael Jackson case
Although the U.S. Tax Court recently handed the Michael Jackson estate a decisive victory regarding the estate’s tax liability, the court did not side with the estate on tax affecting, an issue that has preoccupied valuators, many of whom are proponents of the practice, for a long time.