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People Are Worried About Equity Compensation

The fading use of equity compensation by more mature companies likely reflects: i) relatively cash-rich treasuries; ii) greater interchangeability of personnel to fulfill work functions; and iii) workers’ risk-tolerances (or lack thereof).  Sujan Rajbhandary, vice president and senior member of Mercer Capital’s Financial Reporting Valuation Group, discusses the issue. To read the full article in Mercer Capi ...

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Yes, Yet Another Article on the “Settlement” But With a Twist

Analysis of Unaudited Financial Statements—Who and How? There has been much discussion within the ESOP community about the “settlement” and its reverberations. As readers are likely aware, the settlement in question refers to the 2014 settlement agreement between GreatBanc Trust Company and the United States Department of Labor (DOL). The terms of the settlement include, among other things, an agreement con ...

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Agencies Propose Amendments to Employee Benefit Plan Reporting

Federal Agencies Plan Amendments to Form 5500 Employee benefit plans would face new reporting requirements under extensive changes to Form 5500, Annual Return/Report of Employee Benefit Plan, proposed by the federal government last month. The federal agencies are also proposing to require all group health plans to file Form 5500 along with a new Schedule J. Sally P. Schreiber, Tax Adviser senior editor, exp ...

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Auto Dealership Business Valuations

Nuances Valuing and Normalizing an Auto Dealership There are many reasons an auto dealership may require a business valuation; buy-sell agreements, shareholder disputes, employee stock ownership plans (ESOPs), and estate planning and gifting strategies. In many instances, there will be an opposing party that questions the validity of the final value, whether it be a dissenting stockholder or the Internal Re ...

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U.S. Tax Court Update

Notable 4th Quarter 2015 Cases, Part II of II Part II of this article highlights the remaining notable 4th Quarter 2015 U.S. Tax Court Cases that will be of interest to valuation practitioners and business advisors.  Estate of Purdue reminded us that taxpayers need to address 2036(a) concerns and establish a non-tax reason.  In addition, the case reminds us that gifting an equity or LLC interest may not qua ...

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U.S. Tax Court Update

Notable 4th Quarter 2015 Cases, Part I of II Part I of this article highlights notable 4th Quarter 2015 U.S. Tax Court Cases that will be of interest to valuation practitioners and business advisors. Estate of Purdue reminds us that taxpayers need to address 2036(a) concerns and establish a non-tax reason. In addition, the case reminds us that gifting an equity or LLC interest may not qualify as a present i ...

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Fleming Cardiovascular, P.A. v. Commissioner

Qualified Business Appraiser and Appraisal Needed A November 2015 memorandum by the U.S. Tax Court in Fleming Cardiovascular, P.A. v. Commissioner found that the Internal Revenue Services ("IRS") did not abuse its discretion in revoking the Fleming Cardiovascular, P.A. Employee Stock Ownership Plan's ("ESOP") qualified and tax exempt status for failure to operate in accordance with plan documents. Of note, ...

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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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50 Reasons for a Business Appraisal

Creating Value for Business Owners and Board Members In this article, Edward Mendlowitz, CPA, ABA, CFF. shares his views regarding the importance of having a business valued. He identifies 50 ways that a valuation professional can provide something far more valuable than a number. While the valuation profession is under pressure to reduce costs or prepare a report, the business owner is better served in the ...

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The Valuation of a Closely Held Business

Distinct Qualities and Considerations (Part 2 of 2) In the first part of this series, the author looked at some of the methodologies for considering closely held or private companies. In this second part, the last of the two-part series, the author reviews some of the IRS, judicial, investment banking practices. and other considerations in the valuation process. ...

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Stakes are High in Business Valuations for Estate and Gift Tax Reporting

Thoughts from Experienced Litigation and Business Valuation Professionals Entering the Industry In this article, seasoned BV and litigation support professionals John DelGrego and Heidi Walker share why litigation can be invaluable to a BV professional. The co-authors also expound on the professional perils and high expectations placed by the Tax Court on expert witnesses. Expert witnesses must be objective ...

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Using ESOPS in Succession Planning

A Case Study An ESOP is one of many options available to business owners considering succession-planning options. There are substantial advantages, but there are also regulatory and cost considerations. A feasibility study may suggest whether the ESOP is an appropriate option. In this article, authors Kelly Finnell and Andrew Holmes share their views on when an ESOP is feasible using a case study. ...

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ESOP’s Fables

Increased Scrutiny for ESOP Fiduciaries This article presents a case for higher scrutiny for ESOPs as well as their fiduciaries. By juxtaposing protocol with proverbs from Aesop’s fables, valuable lessons are learned for business and life. ...

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Survey: Business Development Now Tops Forensic and Valuation Services Practitioners’ List of Concerns

Business development concerns outpacing technical issues A new survey by the AICPA reveals that priorities for forensic and valuation services (FVS) professionals have changed significantly in just the last three years. The report details what’s most important to them today and why it may not have as much to do with the economy as you think. ...

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The Latest Word on ESOPs: What We All Need to Know

Has the new federal tax regime set forth the grounds to reconsider an ESOP? An ESOP is a qualified retirement plan that can use debt financing to buy company stock from the company’s owner(s). It’s a serious option for any business owner who wants to liquidate some or all of his or her ownership. Martin Staubus reviews how ESOPs work, as well as the benefits they provide to buyers (employees) and sellers (o ...

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AICPA Supports Bill to Exempt Valuation Specialists from Fiduciary Status—CPA Practice Advisor

Requiring Valuation Analysts to Have Specialized Trainingk Credentials, and to Adhere to Professional Standards Will Protect ESOP Participants and Beneficiaries   CPA Practice Advisor reports that the President and CEO of the American Institute of CPAs (AICPA), Barry C. Melancon, CPA, CGMA, has publicly announced his organization's support for a new bill in the House of Representatives.  H.R. 2041 would mod ...

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ESOPs in 2028

The Future Will Probably Include Not Only More ESOPs, But More High-Percentage (70-100%) ESOPs. Here’s Why What will happen with Employee Stock Ownership Plans and Trusts over the next few decades? Many authorities estimate that as many as one out of every two businesses will change hands over that time period as baby boomers enter retirement age and look to transition their long held businesses. Where does ...

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ESOPs―The Swiss Army Knife of Liquidity Strategies

ESOPs serve as a utilitarian strategy for business owners looking for unique and effective ways to improve employee benefits and business flexibility. William Stewart explains how an ESOP, depending on how you set it up, can function like a Swiss Army Knife. Depending on how you set it up, an ESOP is fully flexible. ESOPs, for instance, offer buyers and sellers a wide range of purchasing options that can va ...

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