Challenge to new Section 2704 regulations is shaping up
The accounting, valuation, and legal professions are hard at work to defeat the Treasury Department's proposed Section 274 regulations. The new regs would curtail, if not entirely eliminate, valuation discounts in family-controlled entities.
Bankruptcy Court Accepts Rationale for Tax Affecting
In a fraudulent transfer case involving S corp, court says valuation should reflect that buyers of S corps would experience a reduction in the value of the corporations' earnings because of the need to pay personal income taxes on those earnings.
Gift Tax Case Pivots on Key Assumption Informing Valuations
Taxpayer parents incurred gift tax liability when, based on improper valuations, they agreed to merge their S corp. with their sons’ S corp. and accepted an unduly low interest in the new company while sons received an unduly high interest, Tax Court says ...
Court Deems Treatment of S Corp Undistributed Income ‘Problematic’
Court rejects expert’s “excess working capital” analysis to determine income for child support purposes saying it conflicts with state statute’s requirement to rely on historical practices when assessing legitimacy of undistributed earnings of an S corp.
Court Hitches DLOM Application to Probability of Sale
In fair value appraisal proceeding, New York court finds DLOM inappropriate given low probability of sale of family business and finds assumption of hypothetical impediments to sale irrelevant; New York law does not mandate DLOM in every circumstance.
Bank of America, N.A. v. Veluchamy (In re Veluchamy)
In a fraudulent transfer case involving S corp, court says valuation should reflect that buyers of S corps would experience a reduction in the value of the corporations' earnings because of the need to pay personal income taxes on those earnings.
High Valuations Complicate Division of Sizable Marital Estate
Appeals court affirms trial court’s above fair market value determinations regarding husband’s interests in various family businesses and the resulting equalization judgment but rejects trial court’s means with which to enforce payment of judgment.
Diez v. Davey
Court rejects expert’s “excess working capital” analysis to determine income for child support purposes saying it conflicts with state statute’s requirement to rely on historical practices when assessing legitimacy of undistributed earnings of an S corp.
Zelouf International Corp. v. Zelouf (I)
In fair value appraisal proceeding, New York court finds DLOM inappropriate given low probability of sale of family business and finds assumption of hypothetical impediments to sale irrelevant; New York law does not mandate DLOM in every circumstance.
Cavallaro v. Commissioner
Taxpayer parents incurred gift tax liability when, based on improper valuations, they agreed to merge their S corp. with their sons’ S corp. and accepted an unduly low interest in the new company while sons received an unduly high interest, Tax Court says ...
Crider v. Crider
Appeals court affirms trial court’s above fair market value determinations regarding husband’s interests in various family businesses and the resulting equalization judgment but rejects trial court’s means with which to enforce payment of judgment.
Marshall v. Marshall (I)
Appeals court says parties’ agreement is ambiguous as to whether distributions related to husband’s ownership in S corp. are includable in alimony and child support calculation; on remand, trial court must determine what income parties meant when specifying use of pretax income from employment.
Courts Agree Reasonable Compensation Is Sound Method for Calculating Spousal Support in S Corp Context
Appeals court says parties’ agreement is ambiguous as to whether distributions related to husband’s ownership in S corp. are includable in alimony and child support calculation; on remand, trial court must determine what income parties meant when specifying use of pretax income from employment.
Appeals Court Tiptoes Around Tax Affecting in Divorce Setting
Appeals court agrees that in valuing husband’s S corp for marital distribution “national case law” (Kessler, Bernier) supports his expert’s tax affecting but says it must defer to trial court’s decision to adopt competing expert’s position not to tax affe ...
Hamelink v. Hamelink
Appeals court agrees that in valuing husband’s S corp for marital distribution “national case law” (Kessler, Bernier) supports his expert’s tax affecting but says it must defer to trial court’s decision to adopt competing expert’s position not to tax affe ...
Gentile v. Gentile
Appellate court affirms lower court’s Fair Market Value (FMV) determination of husband’s S corp. medical practice, which incorporates goodwill value the wife’s expert calculated based on the Goodwill Registry.
Bernier v. Bernier (II)
Massachusetts Court of Appeals remands the case—for the second time—to the trial court for an appropriate valuation of the parties’ S corporations, including a tax affecting according to the “Kessler metric” (adopted from the Delaware Chancery Court).
In re Marriage of Rodenback
Appellate court disavows day-of-trial valuation by expert that used the husband’s “off the cuff” forecasts, preferring value based on historical earnings, without consideration of the tax burden the husband would have to bear in making the equalization pa ...