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Tax Court Analysis of 2703 Issues Instructive to Planning for Valuation Discounts

Fractional interest discounts allowed In Estate of Elkins v. Commissioner, the U.S. Tax Court sides with petitioners holding they were entitled to a ten percent discount from pro rata fair market value with respect to a decedent’s interest in various works of art.  In Fancher v. Prudhome, the Louisiana Court of Appeals upholds a trial court’s determination that using the Income Approach to value a withdrawi ...

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Are Valuation Experts Tax-Affecting the Wrong Earnings?

Important factors to consider in making tax adjustments to pass-through income Damodaran recently wrote about the potential devaluation of dividend-paying stocks if the preferred dividend tax rate were to climb back up to the ordinary rate.  This could inspire valuation experts to make a tax adjustment reducing untaxed Pass-Through Entity (PTE) income to equate it with corporately taxed income that qualifie ...

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Expanding Opportunities—Healthcare Consulting In an Era of Reform, Part I

Changes in the capital markets utilized in financing healthcare transactions have transformed the way that the healthcare providers and enterprises operate within the current transactional marketplace, explains Robert James Cimasi.  These changes, particularly in recent years following the “Great Recession,”  relate to both the availability of capital sources and the types of financial instruments used.  As ...

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Why Rules of Thumb are Dangerous

One Medical Practice Could—Depending on How Rules of Thumb are Applied—be Valued at Several Radically Different Prices. Find Out Why! Paul Hyde, in a recent Around the Valuation World™ in 90 Minutes webinar, explained why rules of thumb are dangerous to rely on for valuation. The focus of his argument relied on six simple graphics that illustrated how the value of one hypothetical medical practice could—dep ...

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Hedge Fund Valuations Under Scrutiny—Risk.net

US Securities and Exchange Commission (SEC) is Aggressively Policing Fund Valuation Practices in the Hedge Fund Industry     Kris Devasabai at Risk.net reports that hedge funds, under pressure from regulators and investors, are establishing robust pricing policies for hard-to-value assets.  They are also hiring independent experts to price complex and illiquid assets as investors and regulators intensify th ...

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High Valuations May Be Bad for Your Business…And Your Ulcer—PE Hub

An Overly High Valuation Can Scare Away Investors or Spark a Down Round that Dilutes an Earlier Angel Investment      Mark Boslet at PE Hub explains that with IPOs on track to have their biggest year since 2010 and some major technology disruptions sparking infectious excitement, it's important to keep in mind key fundamentals including not accepting too high a valuation for your business or investment prop ...

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Federal Cases: ESOP Fidiciuary Responsibility, Valuation Misstatement Penalties, More

Plus: Bishop v. Commissioner Rules on When and Whether a Bad Debt Loss Can Be a Claimed Deduction In Schwab v. Commissioner, a case turns on when a variable universal life insurance policy is a taxable event.  In Boone Operations Co., LLC v. Commissioner, find out when contributing fill dirt to the city of Tucson is or isn’t a charitable or taxable event. ...

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State Case Law: Iowa Focuses on Equalization Payments, Louisiana Considers Future Cash Flow

Recent Cases Consider: Fair Market Value in Arkansas, Equalization Payments and Healthcare Credits in Iowa, and Valuations Based on Future Cash Flow in Louisiana Judge Wiggins in Iowa rules In re Marriage of McDermott on equalization payments and tax credits for health insurance payments.  In Louisiana, Judge Williams finds a valuation in Fancher v. Prudhomme invalid since it was based on assumed cash flow— ...

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Tax Court Considers Renovation Value of $10M Home; Bankruptcy Court and Expert Testimony

A Petitioner Relies Reasonably on His CPA in Gaggero v. Commissioner, the Tax Court Finds. That Makes a Difference: Here’s Why. In Gaggero v. Commissioner, Judge Holmes at the U.S. Tax Court disagrees with the IRS’s contention that the plaintiff conducted an improper scheme to avoid capital gains.  In First Street Holdings NV, LLC v. MS Mission Holdings, LLC, Judge Markell at the U.S. Bankruptcy Court finds ...

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NYU’s Legendary Valuation Expert: 4 Things Apple Must Do To Become A Hot Stock Again —Business Insider

Aswath Damodaran, NYU's Legendary Valuation Expert, Recently Argues that there's a 90% Chance Apple is Undervalued.  Here's Why.   This comes in the wake of Apple shares' breathtaking plunge from recent highs. (That's be about $700 in September to $425 or so today.) In a new blog post, Sam Ro at Business Insider reports that Damodaran thinks that management can learn a few things from the recent market vola ...

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A Foolproof Approach To Writing Complex Excel Formulas —Search Engine Land

Annie Cushing is on a Mission to Rid the World of Ugly Data.  Learn About Data Collection, Analytics, Technical SEO, Analysis, and Beautification.   Annie Cushing,  a Senior SEO at SEER Interactive, a Philadelphia-based online marketing agency, explains that "There comes a time in a marketer’s life when making pretty charts with a predefined dataset just doesn’t cut it. "And finding the sum and average of a ...

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Ten Hard-Earned Lessons About Selling a Business —New York Times

“You’re The Boss” Author Josh Patrick Suggests Business Owners Use Credentialed Advisers Who Work Only for You, Employing Intermediaries, Developing a Personal Financial Plan, More.  Josh Patrick is a founder and principal at Stage 2 Planning Partners, where he works with private business owners on creating personal and business value.  Recently he offered some recommendations about selling a business at th ...

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Rob Slee Draws Distinctions: Distressed Deals, Healthy Deals, Zombie Deals, and What’s Important to Value Creation —MidasNation

MidasFund Will Not Acquire Distressed Companies; However, it Will Buy Stable Divisions of Bankrupt Companies.  Here's Why.   "Last week’s announcement that MidasFund had started acquiring zombie companies caused a flurry of emails," writes Rob Slee on the MidasMoments blog of the MidasNation site.  "Many of you asked about the differences between acquiring distressed, zombie and healthy companies. Let’s dig ...

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“Linked Out”: A Response to a Business Valuation Standards Discussion

There Are Different Standards. They Have Different Places in Various Appraisals. Here’s Why. Jim Hitchner considers various responses to the query:  “When valuing an operating company, is it necessary to mention USPAP in addition to SSVS 1 when talking about the standards adhered to?”  Good question. There were lots of answers from various valuators in a recent discussion.  Here’s Jim’s take on it all. ...

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Estate of Gallagher Tax Court Case is a Valuation Tutorial

The Tax Court Speaks Loudly and Firmly on the Responsibilities of Business Appraisers Hempstead & Co. has published "Estate of Gallagher is a Valuation Tutorial."  The article emphasizes the importance of providing the court with a clear and convincing explanation of the assumptions and arguments you have employed in carrying out a business appraisal. It discusses the recent Tax Court Memorandum opinion ...

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10 Overlooked Tax Breaks —Accounting Today, Bankrate.com

Sweet Tax Deductions for Individuals That Often Get Forgotten  With October 15 behind us and April 15 still comfortably far away, it’s a good time to start boning up on ways to save your clients money once things start getting serious. With that in mind, Bankrate.com identified 10 great deductions that individual taxpayers should use – but often forget.  Accounting Today passes on the good news.  Here's the ...

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Federal Case Law Weighs In On Partnership Interests, Charitable Contributions

A Valuation Misstatement Results in Tax Underpayment; An Appraisal is “Not Qualified.” In Alpha I, L.P., v. United States, Judge O’Malley of the U.S. Court of Appeals for the Federal Circuit considers the legitimacy of certain partnership transfers to charitable remainder unitrusts (CRUTs).  In Rothman v. Commissioner, Judge Laro at the U.S. Tax Court rules on the importance of a “qualified appraisal.”  ...

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Advice When Using the Weighted Average Approach to Project Future Earnings

The Weighted Average Method of Estimating Expected Future Earnings is Based on the Average or Arithmetic Mean. Here’s Why that’s Important. Companies that are growing in revenue need to be valued regularly, and they need to be valued with their future growth in mind. The weighted average approach is a valuable tool. But Richard Claywell suggests caution in using it to extrapolate large projections of future ...

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