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BV News and Trends June 2022

A monthly roundup of key developments of interest to business valuation experts.

Gary Trugman shares sample valuation reports

A good selection of eight sample valuation reports is available on the companion website of Gary Trugman’s book, Understanding Business Valuation, 6th edition.

Purchase price equals value of business caught up in divorce

In Wisconsin, the valuation opinions of two experts were deemed not credible for a business caught up in a marital dissolution.

AICPA offers free webcast on estate/gift valuations

A two-and-a half-hour webcast on estate and gift valuations is available free of charge from the AICPA.

Dettloff-Meyer v. Meyer

The husband in this divorce case appealed the circuit court ruling that relied on the purchase price of the business less than a year before the valuation date. The purchase was made from the wife’s parents at a price the parents determined of $500,000, most of which was goodwill. After an initial ruling from the circuit court accepting the value less debt of the husband’s expert, the wife asked for a reconsideration. The appellate court granted the reconsideration and found a value of the business of $45,230. The husband appealed the reconsidered decision of the circuit court. The appellate court determined that the circuit court’s use of the purchase price was not erroneous.

Wisconsin Appellate Court Affirms Purchase Price as Value of the Business in a Divorce Matter

The husband in this divorce case appealed the circuit court ruling that relied on the purchase price of the business less than a year before the valuation date. The purchase was made from the wife’s parents at a price the parents determined of $500,000, most of which was goodwill. After an initial ruling from the circuit court accepting the value less debt of the husband’s expert, the wife asked for a reconsideration. The appellate court granted the reconsideration and found a value of the business of $45,230. The husband appealed the reconsidered decision of the circuit court. The appellate court determined that the circuit court’s use of the purchase price was not erroneous.

15 Cautionary Areas to Review in ESOP Valuations

Business valuation practitioners perform private-company equity appraisals for many applications including gift/estate tax planning, transaction opinions, and financial reporting; yet ESOP valuation assignments present complex challenges. Not only is the purpose of the appraisal unique, but the particular client, an ESOP trustee (acting as a fiduciary), also has many ESOP-specific disclosures and requirements. A well-developed ESOP valuation report may not simply achieve the appraisal prescription set forth in Revenue Ruling 59-60 or USPAP compliance. Join ...

BV News and Trends February 2022

A monthly roundup of key developments of interest to business valuation experts.

Ownership transition in the middle market

There are an estimated 200,000 middle-market businesses in the U.S., which represent about one-third of private-sector GDP and close to 50 million jobs, according to the National Center for the Middle Market.

Prince estate and IRS settle valuation dispute

The IRS and Comerica Bank and Trust, the administrator of the estate of rock star Prince, have agreed to settle their dispute and agree on an estate value of $156.4 million, according to settlement documents submitted in the case.

The Nelson Tax Court case ‘has it all’

An appellate court recently affirmed the Nelson Tax Court case, which “has it all” in terms of valuation issues, said Barry Sziklay (Friedman LLP) in his session at the New Jersey CPA Society’s Business Valuation and Litigation Services Conference.

Valuing Marketable Securities Portfolios

Given the expected reduction in the estate tax exemption, the use of privately-held marketable equity securities (MES) portfolios as a wealth transfer vehicle is likely to increase. Join Gary Gerlach to learn the ins and outs of valuing these investment vehicles. We will cover the use of multiple (free) sources of closed-end mutual fund (CEF) data and discounts and analyze and select guideline CEFs, focusing on metrics such as asset type, concentration and allocation issues ...

Appellate court KOs unaccrued interest on dissipated assets

In a divorce case, an appellate court vacated the order of the trial court that erroneously charged the husband with over $4 million in unaccrued interest on marital assets that the husband fraudulently dissipated from the marital estate.

Nelson v Commr.

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.

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.

BV News and Trends October 2021

A monthly roundup of key developments of interest to business valuation experts.

Gift and Estate Tax Valuation Update

Join Barry Sziklay for important 2021 income and transfer tax valuation cases as well as the valuation aspects of the adequate disclosure regulations required to report a gift for federal transfer tax purposes and start the statute of limitations running. Internal Revenue Code (IRC) Chapter 14 valuations, Special Valuation Rules §§ 2701-2704, will be addressed in a summary fashion given the complexities of the rules required for a valuation to meet the requirements of Chapter ...

Record attendance at VSCPA conference

Again this year, BVR was pleased to sponsor the two-day Virginia Society of CPAs Forensic and Valuation Services Virtual Conference, which saw record attendance, reports Harold Martin (Keiter), who served as chair of the conference planning task force.

Mohen v. Mohen

In the trial court (TC), the wife was awarded $4,360,158 of mostly unaccrued interest on the corpus of trusts the husband set up unilaterally for the children. The TC took the value of those trusts, $9,291,372, as part of the marital estate. The TC also added $990,945 of interest that the trusts had received and the remaining unaccrued future interest for a total value of “distribution” paid to the husband of $14,642,475 related to the trusts. The appellate court (AC) determined that the future interest was future interest and, thus, not part of the marital estate. However, the AC let stand the determination that the value of the trusts were to be treated as a distribution to the husband.

Husband Dissipates Assets by Placing Them in Trusts for the Children, but the Appellate Court Does Not Allow Unaccrued Interest

In the trial court (TC), the wife was awarded $4,360,158 of mostly unaccrued interest on the corpus of trusts the husband set up unilaterally for the children. The TC took the value of those trusts, $9,291,372, as part of the marital estate. The TC also added $990,945 of interest that the trusts had received and the remaining unaccrued future interest for a total value of “distribution” paid to the husband of $14,642,475 related to the trusts. The appellate court (AC) determined that the future interest was future interest and, thus, not part of the marital estate. However, the AC let stand the determination that the value of the trusts were to be treated as a distribution to the husband.

Two state CPA societies host BV events this month

Some state CPA societies organize business valuation conferences, and two of them are coming up later this month.

Check out the NJCPA’s annual BV conference September 21

The Biden tax proposals, physician compensation, cannabis, and SPACs are some of the cutting-edge topics you’ll hear about at this year’s Business Valuation and Litigation Services Conference, hosted by the New Jersey Society of CPAs.

Prince estate valuation featured on latest AICPA podcast

In the shadow of the recent court decision in the Michael Jackson estate valuation dispute, the estate of pop star Prince is currently locked in a fierce estate and gift tax dispute.

Power Panel: Estate of Michael J. Jackson v. Commissioner

Are you ready for a thriller? Join us for this Power Panel with three experts who worked on the Estate of Michael of Jackson case: Jay Fishman, Mark Roesler, and David Dunn. Bring your questions and learn about complexities of large cases, celebrity valuations, and what valuation experts can take away from this published case.

Federal Tax Litigation, Expert Witnesses, and the IRS

Michael Gregory will address key rules for federal expert witnesses, valuation issues with the IRS, identify key recent BV federal cases, and introduce you to what to expect in 2022. This session will also share information you need from a business valuer that mediates, negotiates, and facilitates alternative dispute resolution to give clients timely closure with significant savings with the IRS and others. After this session you will be able to: reference key federal statutes ...

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