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.
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 finally issued its opinion on the value of Jackson’s name and likeness, as well as the value of his interest in two music publishing assets.
Estate of Michael J. Jackson v. Commissioner
Tax Court mostly sides with estate of late superstar in valuing three contested assets; assets had to be valued separately, based on parties’ stipulations, and at death; court says Jackson’s “tattered” image and likeness meant he earned little money apart from his music; court rejects tax affecting.
Tax Court Hands Jackson Estate Major Win but Finds Reasoning for Tax Affecting Unpersuasive
Tax Court mostly sides with estate of late superstar in valuing three contested assets; assets had to be valued separately, based on parties’ stipulations, and at death; court says Jackson’s “tattered” image and likeness meant he earned little money apart from his music; court rejects tax affecting.
BVU News and Trends April 2021
A monthly roundup of key developments of interest to business valuation experts.
Valuing Telehealth Services
Join Todd Zigrang and Jessica L. Bailey-Wheaton for a discussion of the valuation of telehealth services in the healthcare industry. Learn the current telehealth trends and the role of telehealth in the healthcare industry. Gain an understanding of the types of telehealth services typically provided, such as clinical services, management services, and the provision of technology, and how these services may vary by healthcare industry subsector. Get expert guidance on typical valuation approaches as they ...
Oudheusden v. Oudheusden (II)
In this divorce case, the Connecticut Supreme Court, overturning the appellate court, clarifies that awarding the nonowner spouse part of the value of the owner spouse’s businesses and basing alimony on income generated from the businesses is not impermissible double counting (double dipping).
Connecticut Supreme Court Clarifies Double Counting Rule in Divorce Cases Involving Valuation of a Business and Determination of Alimony
In this divorce case, the Connecticut Supreme Court, overturning the appellate court, clarifies that awarding the nonowner spouse part of the value of the owner spouse’s businesses and basing alimony on income generated from the businesses is not impermissible double counting (double dipping).
Valuing Shareholder Cash Flows
The integrated theory of business valuation provides a conceptual framework for disciplined analysis of valuation questions. Too often, valuation analysts are tempted to view individual components of a valuation assignment on a piecemeal basis. Adhering to the integrated theory helps valuation analysts develop base valuation conclusions, discounts, and premiums that are rooted in a shared perspective of the subject company and the subject ownership interest. In the first webinar of the three-part series, Chris Mercer ...
New evolving ESOP case raises familiar valuation-related issues
A new ESOP litigation is underway in federal district court related to a 2011 transaction in which the majority owner of the company sold his remaining stock to the company’s ESOP.
In Buyout Dispute, Appeals Court Finds There Was No Basis for Jury to Set Aside Appraisers’ Contractually Mandated Value Determination
In buyout dispute, appeals court reverses trial court’s judgment, finding it was based on jury’s erroneous decision to set aside a contractually mandated appraisal and provide its own buyout price; there was no indication the appraisers misinterpreted the controlling partnership agreement; court remands.
Parrish v. Schroering
In buyout dispute, appeals court reverses trial court’s judgment, finding it was based on jury’s erroneous decision to set aside a contractually mandated appraisal and provide its own buyout price; there was no indication the appraisers misinterpreted the controlling partnership agreement; court remands ...