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Is Changing Your Fiscal Year to a Calendar Year a Trick?

Do the missing months mask the true financial performance? In a recent study entitled, “Orphans Deserve Attention:  Financial Reporting in the Missing Month When Corporations Change Fiscal Year,” the authors of the study found that out of the 1,786 public firms reviewed from 1993 to 2008, 45.4 percent shifted their fiscal year-end by intervals of up to two months and opined that these changes could “fly und ...

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Case Update—Is the Discounted Cash Flow Model Subject to Manipulation?

In re Bachrach: the U.S. Bankruptcy Court comments on the discounted cash flow and experts’ reports The discounted cash flow analysis (DCF) has been a standard valuation and damages method for many years. However, a U.S. Bankruptcy Court recently suggested that the “striking” disparity between experts’ conclusions in a case before the court “lends credibility to the concept that the discounted cash flow met ...

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Using Warren Buffett’s “Buffett-style” Valuation on US Bancorp

I built an Excel file with a valuation model using Warren Buffett's measure of "owner's earnings."  In an interesting spin on valuation, analysts at AquaResearch applied what they call “Buffett-style, owner’s earnings” valuation calculations to the US Bancorp (USB) company stock in a DCF style approach.  The author supports his review with a link to an excel file which completely lays out Warren Buffett’s v ...

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Dodd-Frank Survives Court Challenge by States

The states, in an amended complaint, challenged only the portion of Dodd-Frank that empowers the Treasury secretary to order a liquidation of a financial company whose collapse may threaten the stability of the banking system. U.S. District Judge, Ellen Segal Huvelle recently dismissed a lawsuit brought by 11 states and a Texas-based bank, challenging Dodd-Frank’s financial regulations, specifically those t ...

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The Storm is Coming, Will Your Firm Survive a Natural Disaster?

Preparing yourself and your clients for a natural disaster By taking steps before a natural disaster strikes, the firm can position itself to thrive in the aftermath. A meeting with your casualty insurance professional is suggested. The agenda should include a review of the current coverage and discussion of changes in your firm operation since the last review. ...

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IRC Section 4958 — A Big Hammer in the IRS Toolbox

Not for profit entities must plan and document their executive compensation packages outlined in IRC Section 4958 To ensure that not for profit entities are being good stewards of their donors, or taxpayers' contributions, the IRS wields significant power to impose onerous penalties on over-compensated executives from 25% to 200% through the use of IRC Section 4958. ...

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Minnesota Twins Ownership Tangled in IRS Estate Tax Debate

In early 2009, Carl Pohlad, investor and principle owner of the Minnesota Twins, passed away, leaving controlling ownership of the team to his sons.  In settling the estate, the new owners now find themselves embroiled in a tax tangle with the IRS.  The primary point of contention exists with what Pohlad’s share in the team was actually worth at the time of death.  According to the IRS, Pohlad’s ownership i ...

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Finance Chairman Preps Congress for Tax Reform

According to The Hill, Senate Finance Committee Chairman, Max Baucus (D-Mont) has put the committee on notice to expect a comprehensive tax reform overhaul this fall. While not committing to a specific start date, Baucus has promised a thorough rewrite of the tax code sometime after August. Frenzied lobbying has already begun on which allowances should stay and which should go. The move to draft and debate ...

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Is Depreciation a Real Expense?

Depreciation is not a “paper” expense. It is very real. Fully depreciating capital assets distorts the income statement and balance sheet. The depreciation recorded for tax and financial reporting purposes also tends to distort the net asset value of the asset. Depreciation is not a “paper” expense. It is very real. ...

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On the Waterfront

Appraising marina properties is a challenging niche with as many variables as there are bodies of water Just like appraisals on dry land, location plays a major role in developing an opinion of value for a marina property, but the criteria for an appraisal can be a little different from those of landlocked commercial enterprises. Here are a few of the questions that must be considered when valuing marina pr ...

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Pull the Plug on Tesla’s Value?

The value of California-based electric automaker, Tesla Motors’ earning potential and share price are analyzed after a triple-fold increase from earlier this year.  Roben Farzad of Bloomberg Businessweek takes a closer look at attempts by Goldman Sachs to dampen optimism surrounding Tesla’s increasing profit margins.  Do the numbers really show Tesla has power to remain consistent with this kind of growth? ...

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Will Rising Interest Rates Damage Commercial Real Estate Value?

In a fast and concise analysis, Bill Conerly of Forbes.com examines whether the rise in interest rates, particularly with commercial mortgages, automatically translates into a drop in commercial property value.  Conerly explains that your decision-making all depends on whether you take an internal or external view of the process.   How can this logic be wrong? Why doesn’t the table show clear real esta ...

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Revisiting Subsequent Events for Gift, Estate and Charitable Contributions, and Increased Valuation Penalties Exposure

When are “subsequent events” knowable, and what about IRC Sec. 6662(g)(2) penalties? Trout Ranch, LLC v. Commissioner raises additional causes for concern, including subsequent events in appraisal documentation and failures to include them, which may create more valuation penalties on tax filings. ...

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Providing Effective Litigation Services (Part 4 of 4)

Practice techniques used to serve as an effective expert witness In this final part of Mark Shirley’s litigation services series, the focus turns to practical tips for new and experienced expert witnesses. These include what to consider before engaging, how to organize the file, the need to understand the vernacular and preparation, as well as the need to understand the discovery process. Impressions are al ...

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Florida Adopts Daubert

On June 4, 2013, Florida Governor, Rick Scott signed HB 7015, joining the Federal Courts and other jurisdictions in adopting the Daubert test for admission of expert testimony. Just weeks ago, Florida followed the Frye Standard which allowed experts to testify if their expertise was “generally accepted” in the field in which it belongs. Many had felt that is allowed “phony science” or strange testimony from ...

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