In Appraisal Action, Court Determines Fair Value Using Deal Price Minus Synergies and Adjusting for Increase in Value From Signing to Closing of Merger
In a merger action involving a publicly traded company, dissenting shareholders sued for a higher value than the deal consideration. Under the applicable appraisal jurisprudence, the court calculates fair value using the deal price minus synergies and adjusting for the change in value of the target between the signing and closing of the transaction.
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.
Tax changes to watch for under the Biden administration
Other than the possibility of changing corporate tax rates, there is “nothing of earth-shattering importance” in terms of tax, estate, and regulatory changes expected from the Biden administration—for now, anyway—according to a panel of valuation experts on a recent BVR webinar.
Tax Court deals another blow to cannabis dispensaries
In recent years, numerous cannabis businesses that are legal under state law have unsuccessfully challenged section 280E of the Internal Revenue Tax Code, which prohibits tax deductions for a business that “consists of” trafficking in a controlled substance.
BVU News and Trends March 2021
A monthly roundup of key developments of interest to business valuation experts.
Tax Court allows for ‘slight’ discount for lack of control for majority interests in real estate holding companies
In a gift and estate tax dispute, the estate and Internal Revenue Service agreed to apply discounts for lack of control and marketability to the majority interests in a number of real estate holding companies.
Valuing Small and Micro Businesses Using the Income Method
Focus in on valuing micro and small businesses using the income methods of business valuation. Learn to distinguish differing risk factors between large companies and micro and very small companies. Join Gregory Caruso for a deep dive into problematic areas of actual small-business valuation cases to review theory and tie it into the actual application of methods using best practices and professional judgment. Audience questions and succinct opinions welcomed in this hands-on event.
Prince Estate and IRS Embroiled in Fierce IP Valuation Dispute
Back in January, BVWire ran a news item on a recent article from the Star Tribune. The article states that the executor of the estate of Prince, the late world-famous rock star, and the Internal Revenue Service are currently locked in a fierce estate and gift tax dispute. The IRS argues the executor has seriously undervalued the estate, and the executors claim the IRS’ calculations “are riddled with errors.”
Navigation Through the Maze in Complex Debt Instruments Valuation
Global convertible security issuance has surged in the wake of the COVID-19 outbreak as companies rush to raise cash to see them through the economic impact. This has resulted in an increase in demand for fair valuation requirement for convertible instruments. However, determination of fair value of convertible instruments can be a challenging task. Multiple provisions and attributes of the underlying security need to be considered and modeled. Join Mark Zyla, Rajesh C. Khairajani, and ...
NICE Value! How to Deploy the Non-Marketable Investment Company Evaluation Method
When it comes to valuing minority interests in family investment entities such as family limited partnerships, business valuation professionals have not often used the income approach. However, in three recent Tax Court cases, the income approach was prominently featured, and, in one case, it was clearly the deciding factor in the court’s decision. Join William Frazier to learn about the nonmarketable investment company evaluation (NICE) method. Learn its origins, what it doesn’t replace, and how ...
Power Panel: Live Expert Answers for Today’s Tough BV Questions
What is in store for 2021? While we don’t have a crystal ball, we do have the next best thing. Thought leaders Jay Fishman, Jeff Tarbell, Michelle Gallagher, and Ken Pia are on hand to answer your questions on what is changing, trends within the profession, and thought processes behind tackling tough problems. What’s more, if you send in a video of yourself asking the question, you will get free admission to the session. Use ...
Prince estate and IRS embroiled in fierce valuation dispute
A recent article in the Star Tribune says the executor of the estate of Prince, the late world-famous rock star, and the Internal Revenue Service are currently locked in a fierce estate and gift tax dispute.
In tax refund case, expert identifies only viable method to value stock in ‘severely distressed’ private company
The taxpayer sued the federal government for a refund, arguing she had overpaid income taxes on stock she had received as part of settling a lawsuit against her former employer.
Pandemic Triggers Chances for Valuers in Exit Planning
One of the key takeaways from the recent ENGAGE 2020 conference sponsored by the AICPA was one of particular interest to business valuers. “The pandemic has created some temporary financial planning opportunities,” says Steve Siegel, JD, LLM, president of The Siegel Group. “If you have a client who plans to pass their business along to a child one day—while business values are low, this is a useful time to get a new business appraisal. If you wait, values may recover, and federal tax laws may be less generous to business owners seeking to transfer their interests to family members.”
Lucero v. United States
In tax case, court approves refund, finding value of unlisted stock in distressed closely held company that taxpayer received as part of a settlement was less than stated in settlement agreement; taxpayer’s expert showed market value approach was only suitable method to calculate fair market value.
Court Adopts Taxpayer Expert’s Method to Value Unlisted Stock of ‘Severely Distressed’ Company
In tax case, court approves refund, finding value of unlisted stock in distressed closely held company that taxpayer received as part of a settlement was less than stated in settlement agreement; taxpayer’s expert showed market value approach was only suitable method to calculate fair market value.
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.
Mission Critical in Divorce: 10 Key Insights in 50 Minutes-a Free AAML/BVR Virtual Divorce Conference Preview
Brought to you by the American Academy of Matrimonial Lawyers (AAML) and Business Valuation Resources (BVR), this free preview for the Virtual Divorce Conference brings together attorneys, valuation professionals, and industry experts in a one action-packed, 60-minute session. Get short compelling lessons that you need to know now. This year’s conference focuses on the topics most impacted by divorce, and anyone serving business owners involved in matrimonial dissolution can get access to this premium preview ...
Masterclass in Normalizing Compensation
Three nationally known experts will explain how to determine reasonable compensation amounts. The principal author of the Job Aid, Mike Gregory, will explain the “IRS Job Aid on Reasonable Compensation” and share case studies with many tips and traps. One of the foremost national experts on reasonable compensation, Stephen Kirkland, will share insights and sources to help determine reasonable compensation for your clients. Paul Hamann will show how easy it is to use RCReports to ...
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.
BVLaw Case Update
Join Jim Alerding, a veteran valuator, and Sylvia Golden, BVR’s legal editor, for a discussion of some of the most consequential recent valuation decisions. This selection of state and federal cases includes two key state court rulings on the use of discounts in valuing minority interests in buyback situations, a state court decision on the admissibility of calculations of value in divorce proceedings, an expansive statutory appraisal ruling involving a public company from a North ...