Tilstra v. Boumatic LLC
Defendant’s “blunderbuss of objections” to opposing expert’s valuation of loss of goodwill misses mark, 7th Circuit says; expert used a standard business valuation method and his reliance on company financials was justified under rules of evidence.
Lunn v. Lunn
Appeals court finds enterprise goodwill is not a marital asset when the business is a sole proprietorship and orders trial court to produce a valuation of husband’s solo dental practice without “consideration of professional or enterprise goodwill.”
Asset Approach Avoids Double Counting of Future Earnings
Appeals court affirms trial court’s decision favoring asset approach for valuing owner spouse’s medical practices; unlike income approach, it avoids accounting for owner spouse’s future earning twice, in asset valuation and determination of alimony.
Rabe v. Rabe (II)
Appeals court affirms trial court’s valuation, which implicitly assigned goodwill to business, finding that since the company was not a professional practice it is likely that the company’s, rather than the owner spouse’s, reputation brings in business.
Reedy-Huffman v. Huffman
State high court affirms trial court’s determination that husband’s naturopathic practice had zero goodwill value based solely on husband’s testimony that a similar practice in the area failed to attract a buyer despite being on the market for a year.
Goodwill Determination Turns on Classification of Auction Business
Appeals court affirms trial court’s finding that all the goodwill in husband’s auction business is nontransferable where the husband is the only licensed auctioneer and the sole shareholder of the company and allows for expansion of concept of profession.
In re Mauer
Appeals court affirms trial court’s decision favoring asset approach for valuing owner spouse’s medical practices; unlike income approach, it avoids accounting for owner spouse’s future earning twice, in asset valuation and determination of alimony.
Valuations Bolster IRS’s Transferee Liability Claim
In transferee liability case, Tax Court finds IRS proved petitioner was liable for causing company’s fraudulent asset transfers and benefitted from intermediary company’s fraudulent transfer; valuations showed company was insolvent at time of transfers.
Expert’s Solid DCF and Industry Research Sway Court
Court discredits respondent expert’s capitalization of earnings calculation and market-based analysis, noting “severe deficiencies” and instead adopts petitioner expert’s valuation but applies DLOM to entire equity value, not just goodwill.
Multimillion-Dollar Personal Goodwill Allocation Leaves Court Stunned
Court says defendants were unjustly enriched when they allocated 40% of the price a competitor paid for assets of and to settle lawsuit with their company to personal goodwill where they also received compensation for consulting services and noncompetes.
McCarter v. McCarter
Appeals court affirms trial court’s finding that all the goodwill in husband’s auction business is nontransferable where the husband is the only licensed auctioneer and the sole shareholder of the company and allows for expansion of concept of profession.
Devoid of Goodwill, Corporation Escapes Income Tax Liability
Tax Court says taxpayer’s company owned no corporate goodwill and had no right to taxpayer’s personal goodwill and, therefore, was not liable under IRC Sect. 311(b)(1); the taxpayer, in turn, was not liable for gifting corporate goodwill to his sons.
Wright v. Irish (Hudson Valley Clean Energy, Inc.)
Court discredits respondent expert’s capitalization of earnings calculation and market-based analysis, noting “severe deficiencies” and instead adopts petitioner expert’s valuation but applies DLOM to entire equity value, not just goodwill.
Estate Valuation Can’t Ignore Historical Data, Tax Court Says
Tax court disapproves of estate’s “conflicting expert reports” as to value of decedent’s 100% interest in a C corp. but ultimately adopts estate’s DCF valuation, finding its treatment of personal goodwill is more credible than the IRS’s approach.
Court Nixes Murky Business Goodwill Determination
Appeals court rejects business goodwill award to the husband as a community asset, finding there was no goodwill in the business entities, as the trial court well knew; the determination is based entirely on the expectancy of husband’s future earnings.
Cullifer v. Commissioner
In transferee liability case, Tax Court finds IRS proved petitioner was liable for causing company’s fraudulent asset transfers and benefitted from intermediary company’s fraudulent transfer; valuations showed company was insolvent at time of transfers.
‘Blurred’ Solvency Analysis Diminishes Expert’s Credibility
Bankruptcy court finds expert’s analysis “blurred the line” between going concern and liquidation value, detracting from opinion’s credibility; but court approves of expert’s “precise” time frame for capturing data with which to determine solvency.
Can You Trust a Valuation That Falls Short of AICPA Standards?
Appeals court finds error in trial court’s refusal to value business; even if limited data caused expert’s estimate to fall short of AICPA standard, it was based on the market approach, a “sound and reasonable method to value a closely-held business.”
Potok v. Rebh
Court says defendants were unjustly enriched when they allocated 40% of the price a competitor paid for assets of and to settle lawsuit with their company to personal goodwill where they also received compensation for consulting services and noncompetes.
Taxpayer Scores Partial Success in Cal. Hotel Property Tax Suit
Appeals court says assessor’s version of income approach to determine hotel property taxes violates law because it does not identify, value, and exclude certain intangible assets; but management fee deduction largely captures hotel’s goodwill.