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Dissecting the IRS Job Aid on S Corporation Tax Affecting

Background and Objectives of the Job Aid (Part 3 of 3) In the third article of this three part series, the author discusses the remaining portions of the Job Aid, specifically, the Discussion and Analysis Section of the Job Aid which addresses: Evidence-Based Valuation Analysis, Theory-Based Valuation Analysis, and Weighting of Factors and Approaches and shares his views on the value and limits of this docu ...

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Quality of Earnings

When Performing a Business Valuation Earnings are not always objective and valuations apply a multiple to earnings to determine a company’s value. The elements making up a company’s valuation involve determining normalized earnings, a decision whether income taxes would be applied, and the capitalization rate to be used to get the value. There are also other factors, but this article looks at the quality of ...

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Dissecting the IRS Job Aid on S Corporation Tax Affecting

Background and Objectives of the Job Aid (Part 2 of 3) In the first of this three-part series, the leading cases involving tax-affecting where analyzed; those cases discussed included: Gross, Wall, Heck, Adams, Dallas, Gallagher, Korbel, and Guistina. This second part analyzes the first two parts of the Job Aid by section, the “Executive Summary” and first three subsections of the “Discussion and Analysis”, ...

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To (Appraisal) Arbitrage or Not?

In recent years, appraisal arbitrage cases seem to be a more strategy.  Karolina Grabowicz, a senior financial analyst with Mercer Capital, looks at some current cases and their outcomes.   To read more about the results of this report in the Mercer Capital's Financial Reporting Blog, click: To (Appraisal) Arbitrage or Not?  This article is republished from Mercer Capital's Financial Reporting Blog.  I ...

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Caution: Be Sure to Consider Tax Structure

When Using Guideline Transaction Data Income taxes play a major role in the pricing and structure of business transactions because income tax consequences associated with the sale or purchase of a business can substantially reduce the seller’s net proceeds and/or lower the net cost of a purchased ownership interest to the buyer. Because of this issue, it seems appropriate to assume that actual transactions ...

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Dissecting the IRS Job Aid on S Corporation Tax Affecting

Background and Objectives of the Job Aid (Part 1 of 3) The release of this series of Job Aids has been hailed by many as a new era of communication and understanding between the Internal Revenue Service, taxpayers, and practitioners. However, in the opinion of this author, and others, releasing these additional documents in such a formal manner seems to be an attempt to influence practitioner behaviors in s ...

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Valuation Concerns Mark Southern Capital Forum: Are VC Trends the Canary in the RIA Coal Mine?

The annual Southern Capital Forum sponsored by Mercer Capital brought to light several interesting comments.  Matthew Crow, President of Mercer Capital, looks at some of these dealing with stretched valuations. To read more about the results of this report in the Mercer Capital's Financial Reporting Blog, click: Valuation concerns mark Southern Capital Forum: Are VC trends the canary in the RIA coal mine?  ...

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Estate of Giustina v. Commissioner

Tax Controversy Insights In matters argued before the U.S. Tax Court, valuation professionals are frequently asked to provide opinions related to the value of closely held businesses and of fractional ownership interests in closely held businesses. This discussion relates to a recent appeal of a U.S. Tax Court decision involving such valuation issues. The case in question is Natale B. Giustina v. Commission ...

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Unicorn Valuations: What’s Obvious Isn’t Real, and What’s Real Isn’t Obvious

Unicorn valuations are not directly comparable to public company valuations.  Travis Harms, leader of Mercer Capital’s Financial Reporting Valuation Group, looks at how the numbers could potentially be misleading. To read more about the results of this report in the Mercer Capital's Financial Reporting Blog, click: Unicorn Valuations: What’s Obvious Isn’t Real, and What’s Real Isn’t Obvious.  This article i ...

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Treatment of Selling/Employee Shareholder

Transition Period Payments After a Business Acquisition Owner’s of closely held businesses will usually be required to remain active in the business after the same is sold. This article examines two key questions related to such post-transaction transition payments: (1) how much should the buyer pay to the sellers for these transition period services, and (2) how should these transition period payments be s ...

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Look Before You Leap: Evaluating a Section 83(b) Election

Do you and your employees know how to get the most tax savings when choosing a benefit election?  Sujan Rajbhandary, senior member of Mercer Capital’s Financial Reporting Valuation Group, discusses an IRC Section 83(b) election and what’s considered in making this choice. To read more about the results of this report in the Mercer Capital's Financial Reporting Blog, click: Look Before You Leap: Evaluating a ...

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Equity-Based Compensation: Are Non-GAAP Earnings Misleading?

Stock-based compensation is used by companies of all shapes and sizes.  Travis W. Harms, leader of Mercer Capital’s Financial Reporting Valuation Group, explains from a valuation standpoint, the importance of measuring its fair value. To read more about the results of this report in the Mercer Capital's Financial Reporting Blog, click: Equity-Based Compensation: Are Non-GAAP Earnings Misleading?. This artic ...

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Probability Based Estimation and the DLOM Calculation

Refining and Selecting the Appropriate DLOM The discount for lack of marketability (DLOM) is the result of illiquidity. It represents the inability to sell quickly when an investor decides to sell an asset. It is the economic cost of failing to realize gains or to avoid losses during the time period that the investor or closely held business owner is trying to sell the asset or securities. In this article, ...

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Crude Oil

Price Stability vs. Market Share Bennet Kpentey, an Accra, Ghana management and financial consultant with a focus on the oil, gas, and energy sector, shares his views on the strategies of maintaining and increasing crude oil production and how the volatile energy prices will affect growth in emerging economies and other industries. ...

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New Rules Aim to Claw Back Incentive-Based Pay

The SEC has proposed new rules and requirements for certain types of incentive-based executive compensation.  Lucas M. Parris, Senior Member of Mercer Capital’s Financial Reporting Valuation Group, explains the rules and how they would apply. To read more about the results of this report in the Mercer Capital's Financial Reporting Blog, click: New Rules Aim to Claw Back Incentive-Based Pay.  This article is ...

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CFOs: This Year is Going to Be Bad

What is the predicted earnings and revenue outlook?  Mark Fahey, CNBC Data Journalist, interviews some chief financial officers for their thoughts and insight and what we should prepare for. Find out more on the CNBC article, click: CFOs: This year is going to be bad. ...

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Rules for the Modern Investment Manager

The SEC has proposed new rules and amendments that are more stringent and would alter requirements.  Mary Grace McQuiston, Senior Financial Analyst with Mercer Capital, offers insights and explores some of the ramifications these changes could bring. Read more about the results of this report in the Mercer Capital's Financial Reporting article, Rules for the Modern Investment Manager.  This article is repub ...

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8 Things You Need to Know About Section 409A

Are you aware of these interesting tips regarding Section 409A?  There may be more to it than you think.  Travis Harms, leading Mercer Capital’s Financial Reporting Valuation Group, answers eight questions to offer practical and comprehensive information about how Section 409A works. Read more about the results of this report in the Mercer Capital's Financial Reporting article, 8 Things You Need to Know Abo ...

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