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Key Tennessee appeals court ruling finds tax affecting ‘relevant’ to fair value buyout

In a Tennessee buyout dispute involving a limited liability corporation organized as an S corporation, the parties disagreed over whether it was appropriate to tax affect in calculating the fair value of the terminated member’s interest.

Raley v. Brinkman

In LLC member buyout dispute, the Court of Appeals finds the term “fair value” does not contemplate the use of shareholder-level discounts. However, tax affecting is relevant evidence when determining the going-concern value of subject S corp. Trial court must consider evidence on tax affecting.

Tennessee Appeals Court Clarifies Use of Discounts and Tax Affecting in Court-Ordered LLC Buyout

In LLC member buyout dispute, the Court of Appeals finds the term “fair value” does not contemplate the use of shareholder-level discounts. However, tax affecting is relevant evidence when determining the going-concern value of subject S corp. Trial court must consider evidence on tax affecting.

Global BVU News and Trends March 2020

Business valuation news from a global perspective.

Landmark Jones case featured in upcoming workshop

“Read the Jones case,” an IRS official said when asked about the position the IRS is taking on tax affecting pass-through entities.

Connecticut court affirms lower court's decision not to tax affect

In a buyout dispute involving a Connecticut family business, an appellate court recently upheld the trial court’s earlier decision not to tax affect the earnings of the company in valuing the departing shareholder’s interest, even though experts for both sides tax affected.

What corporation tax rate should you use in your business valuations now?

The Finance Act 2016 set corporation tax for 2020-21 at 17%, but the Conservative party intends to increase the rate to 19% (and maintain that rate for the rest of the new Parliament).

Connecticut court says ‘no’ to tax affecting but limits the reach of its ruling

In a buyout dispute involving a Connecticut family business, an appellate court recently upheld the trial court’s decision not to tax affect the earnings of the company in valuing the departing shareholder’s interest, even though experts for both sides tax affected.

BVLaw Case Update: Kress, Vinoskey plus three more cases that dominated 2019

Join Jim Alerding, a veteran valuator, and Sylvia Golden, BVR’s legal editor, for a discussion of five of the most consequential valuation and damages cases of 2019. This selection of state and federal cases includes the year’s tax decisions that have reframed the conversation on tax affecting, a statutory appraisal case illustrating the Delaware Court of Chancery’s current approach to determining fair value, an ESOP trial court decision that solidifies the DOL’s litigation success, and ...

R.D. Clark & Sons, Inc. v. Clark

Trial court’s fair value determination in buyout dispute involving family business withstands appeal, including decision not to tax affect or apply majority and minority discounts; appellate court finds there is no controlling state law on the issues and upholds trial court’s findings on facts.

Courts Reject Tax Affecting and Use of Discounts in Connecticut Buyout Dispute

Trial court’s fair value determination in buyout dispute involving family business withstands appeal, including decision not to tax affect or apply majority and minority discounts; appellate court finds there is no controlling state law on the issues and upholds trial court’s findings on facts.

Top speakers at forensic and valuation conference in Tennessee October 21-23

BVR is pleased to sponsor the Tennessee Society of CPAs Forensic and Valuation Services Conference October 21-23 in Brentwood (just south of Nashville).

Tax Court adopts tax-affected valuation of PTE without overturning Gross

For years, the appraisal community has wondered when the U.S. Tax Court will recognize the need for tax affecting when valuing pass-through entities (PTE) and how the court will square its decision with precedent, i.e., the Gross case in which the Tax Court rejected the taxpayer’s tax-affected valuation.

Letter to the Editor: Response to a Reader’s Comments Concerning the Kress Case

The Kress case has received a great deal of attention on a number of valuation fronts, most notably that both the taxpayer and the government tax affected the earnings of the subject S corp. This letter to the editor is a response to comments on the case made by an IRS analyst.

Distinguishing Gross, Tax Court adopts tax-affected valuation of PTE

In an ingenious move, the U.S. Tax Court, ruling on an Oregon gift tax dispute, accepted the taxpayers’ tax-affected valuations of pass-through entities (PTE) without overturning Gross.

Estate of Aaron Jones v. Commissioner

In gift tax dispute, Tax Court adopts estate expert’s valuation of two related PTEs, including expert’s tax affecting; court distinguishes Gross and later cases; issue is not whether to tax affect but how; estate expert’s tax affecting was “more accurate than [IRS’] blunt zero-rate approach.”

Keeping Gross Alive, Nimble Tax Court Accepts PTE Tax Affecting

In gift tax dispute, Tax Court adopts estate expert’s valuation of two related PTEs, including expert’s tax affecting; court distinguishes Gross and later cases; issue is not whether to tax affect but how; estate expert’s tax affecting was “more accurate than [IRS’] blunt zero-rate approach.”

BVU News and Trends September 2019

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

A special announcement on the 20th anniversary of Gross

On July 29, 1999, a landmark case rocked the business valuation world.

More than one valuation issue in Kress

Tax affecting is only one issue that makes the federal district court’s opinion in Kress a must-know for valuators, notwithstanding a recent reader comment that it’s doubtful the case would have received much attention had it not been for the tax-affecting angle.

Kress and S Corp Valuations: Be a Little Cautious

Details have emerged about the methodology the government’s valuation expert used in the Kress gift tax case. The case is important because both sides tax affected the earnings of the subject S corp, which is contrary to the position the IRS and the Tax Court have taken in the past.

Reader comment on Kress case coverage

Responding to the attention the Kress case has received (at BVR and elsewhere), Harry Fuhrman, financial analyst with the Internal Revenue Service, gave us the following comments.

Kress appeal still a possibility

As the valuation community ponders the reach of the recent Kress decision, many eyes are trained on the government’s next move.

Hope for clarity on S corp valuations

The recent Kress case indicates approval of S corp tax affecting, but the court was neutral on the issue of an S corp premium (see prior coverage).

Divorce conference speakers share valuation and legal practice tips

In “25 Hot Tips in 75 Minutes,” one of the most popular panels at the recent AAML/BVR National Divorce Conference in Las Vegas, attorneys and valuation experts shared tips on how to succeed in litigation as well as in managing client relations and workflow.

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