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 in the Estate of Gallagher v. Commissioner, (TC Memo. 2011-148). The court’s valuation was closest to the value on the return as filed.
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The “Market” is Not Always Right When it Comes to Value, Especially in M&A Transactions The mergers and acquisitions market began a slow recovery this last year after a sharp downturn in 2009. Was the slowdown caused by banks reducing lending activity, cash hoarding by businesses, economic uncertainty, or the simple failure of buyers and seller to agree upon price? Michael Blake takes a look at how value is variously defined—“fair market value,” “fair value,” “investment value,” and “market value”—and offers an assessment of what may prove to be the primary market M&A activity drivers going forward.
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The United States District Court for the District of Columbia on Friday struck down the IRS’s registered tax return preparer program and enjoined it from enforcing the regulations Alistair M. Nevius at the Journal of Accountancy reports that a federal district court has struck down the Internal Revenue Service’s registered tax return preparer program as exceeding the IRS’ statutory authority. The court granted summary judgment to three tax return preparers who had sued, claiming they would lose revenue and perhaps be forced out of business by the rules. The court enjoined the IRS from enforcing the regulations:
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Some Schools Cut Hours of Hard-Pressed Adjuncts to Avoid Rules on Insurance Mark Peters and Douglas Belkin at the Wall Street Journal report that the federal health-care overhaul is prompting some colleges and universities to cut the hours of adjunct professors, renewing a debate about the pay and benefits of these freelance instructors who handle a significant share of teaching at U.S. higher-education institutions:
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SSRN Journal of Wills, Trusts, & Estates Law — Top 10 Papers Downloaded Nov-January Include Pieces on Valuation Discounting, Tax-Deductible Conservation Easements, and More The Wills, Trusts & Estates Prof Blog reports the top downloads from November 21, 2012 to January 20, 2013 from the SSRN Journal of Wills, Trusts, & Estates Law for all papers announced in the last 60 days. Here are the top four. Visit the blog to see the rest.
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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 list:
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Rule Will Require a Second Appraisal in Situations Where a Home is Being Flipped for a Quick, Higher Resale A new rule passed Jan. 15 gives mortgage lenders an additional year to institute appraisal standards for higher-risk loans, Bloomberg reported, and Appraiser News Online highlighted. The extension is one of the revisions that regulators made to the Dodd-Frank Act to address concerns from financial firms. Appraiser News Online explains that:
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Ahead of the new health-care law, small firms worry about crossing the crucial 50-person threshold — and about rising premium rates Emily Maltby at the WSJ Law blog reports on increasing concerns about the forthcoming healthcare laws among small business owners. This seems to be a prominent issue and concern among small business owners, and has been noted in most every major media outlet in recent weeks, from the New York Times to Forbes, CNN, US News & World Report, FoxNews, The Economist, The Hill, the Washington Post, and more:
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Here are four surprising ways to protect yourself in a law suit and keep legal fees to a minimum. Kevin Daum at Inc. advises: “Shakespeare said, “First kill all the lawyers.” Maybe this seems a tad aggressive, but then again, for most people the last thing you look forward to is someone showing up at your door with a subpoena. Whether a lawsuit is business related or personal, the thought of engaging an attorney for protracted litigation can strike fear into a person’s heart.” Not only is there emotion and argument to contend with, but the sheer agony of…
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The FASB and IASB Don’t Seem to Be Open to Reconsidering Basic Assumptions Behind the “Right-of-Use” Asset. Here’s Why They Should. The attempt to find a single lease accounting model based on recognition of a right-of-use asset has faltered, assert two professionals in Grant Thornton LLP’s National Professional Standards Group. In a new white paper, they suggest a control-based model as an alternative:
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Some Stakeholders Suggest Improvements to Segment Reporting Information A 1996 accounting standard established to improve the way public companies report financial information about their business segments generally achieves that purpose, although some stakeholders suggest improvements. That was the overall conclusion of the post-implementation review (PIR) of Financial Accounting Standards Board (FASB) Statement No. 131, Disclosures about Segments of an Enterprise and Related Information (codified in Accounting Standards Codification Topic 280, Segment Reporting). The PIR process was established by the Financial Accounting Foundation (FAF) in 2010. The Financial Accounting Foundation elaborates:
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U.S. Middle Market Leaders Express Preferences re: Spending, Debt, and Fiscal Cliff The National Center for the Middle Market (NCMM) recently (early December 2012) conducted a survey of 1,000 U.S. middle market business leaders across all industry sectors and geographic regions to gauge their preferences for the outcome of the negotiations. Here’s what they found:
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Qualifying Offices Can Deduct Up to $1,500 Per Year Michael Cohn at Accounting Today reports that The Internal Revenue Service plans to introduce a simplified way for small business owners and home-based employees to claim the home office tax deduction.
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When Is a Foreign Tax Creditable Under Sec. 901? The Tax Adviser’s James A. Beavers, J.D., LL.M., CPA, CGMA, reports that The U.S. Supreme Court has agreed to hear a case that delves into the contentious issue of when taxpayers are eligible to claim a foreign tax credit under Section 901 of the U.S. tax code. A ruling by the court would clarify part of the provision that has been litigated for decades.
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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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Document Incentive, Retention, and Non-Compete Agreements; Build a Broad Management Team Business owners need to be careful about vague assurances to “take care of” key employees before an acquisition. Brett Stacey offers tips on how best to manage a transition in a responsible manner that’s likely to address hurt feelings, protect employee morale, and minimize law suits.
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Investors Cool on Tech A survey of tech firms’ valuations shows many companies are challenged. Here’s detail from various reporters:
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When Valuators Use a Weighted Average Cost of Capital (WACC) to Determine a Discount Rate, the Rate Needs to Be “Iterated.” Here’s Why. When an expert determines a discount rate for a controlling interest in a valuation using the Weighted Average Cost of Capital (WACC), that discount rate needs to be iterated. Since market values of debt and equity in a closely held company are not publicly traded and known, as Richard Claywell explains, the iteration process is necessary. It’s the only way to demonstrate the validity of using an industry average capital structure. Without iteration your discount rate—and proposed…
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Enhanced Training, Meaningful Use Incentives, Patient Portals, HIEs, Mobile Apps, a Move to the Cloud, and More Yes, portals and mobile EHRs were big in 2012 — but will they continue to make headlines in 2013? And what about stuff like ICD-10 training, health information exchanges (HIEs), and telemedicine? Marissa Torreri reports that Physicians Practice asked more than a dozen healthcare IT experts, including physicians, consultants, and administrators, to give us their predictions for the coming year. Here are the magazine’s first five predictions. Read the full piece here.
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Innovation Decreased by 40% at Technology Companies After They Went Public, Finds Stanford Graduate School of Business Study Leslie Kwoh at the Wall Street Journal reports that while many tech entrepreneurs dream of taking their companies public, they may want to think twice. While public offerings raise cash, new research suggests that IPOs can also result in stunted innovation at technology firms. Here’s more: