Shielding the Family Business The best part for valuators is that all of this requires a professional appraisal (detail below). The Wall Street Journal Tax Report's Laura Sanders reports  that: Small-business owners often complain of feeling caught in the cross hairs of the tax code. For a change, here's good news. The Tax Court has just blessed a new technique that owners of closely held businesses—and wea ...

Two New Taxes on Net Investment Income and Medicare Will Take Effect on January First At the Wall Street Journal's Tax Report, Laura Saunders explains.   The word is out: Two new taxes on the affluent and wealthy will take effect as scheduled next year as a result of the Supreme Court's decision upholding the health-care overhaul. One is a new 3.8% tax on net investment income, and the other is a 0.9% incre ...

The Supreme Court Has Long Distinguished the Taxing Power from the Regulatory Power  Paul Moreno, professor of history at Hillsdale College,  details the history on the Wall Street Journal opinion page:  The first enumerated power that the Constitution grants to Congress is the "power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welf ...

Wealth Managers: Proceed with Caution When Setting Up an FLP Once an esoteric way for families to centralize management of assets, the Family Limited Partnership (FLP) is becoming extremely popular this year, writes the New York Times.  Why?  Because of the scheduled expiration of the $5.12 million gift tax exemption at the end of this year.   Still, setting up an FLP doesn’t make sense for all companies.  ...

In 2009 Duff & Phelps and the Financial Executives Research Foundation (FERF) first published the results of their comprehensive Goodwill Impairment Study. The 2009 Study examined U.S. publicly-traded companies’ recognition of goodwill impairment at the height of the financial crisis (the end of 2008 and the beginning of 2009), and featured a comparative analysis of the goodwill impairments for over 5,0 ...

Reviewing and Revising Partner Agreements. In my prior firm, the review and revision of partner agreements was a process that happened every ten to fifteen years, if that often. I think that is pretty common in most firms. The problem is that firms change and evolve as do the partners and the environments that we practice in. Our agreements need to keep pace with that change. I continue to be amazed at the ...

Ron Stacey considers Return on Invested Capital (ROIC) and growth using EBITDA as a proxy for cash flow. ROIC, Stacey writes, is a critical value driver that’s probably the single most important factor for a given cost of capital.  But calculation is never simple: “People always want a formula, but it doesn’t work that way,” Warren Buffet once noted. “You have to estimate total cash generated from now to et ...

In Palmerino v. Palmerino, the Massachusetts Court of Appealsconsidered whether a trial court erred in valuing the husband’s grocery store. The trial court’s approach had not included discounts—and went further to state that the income approach is preferable for valuation.  Find out what the court decides!  In Giaimo v. Vitale, the Supreme Court of New York considers the dissolution of a company called EGA ...

The Big Picture: Medicaid Impact,  Patient Demand, Physician Pay, and More.   Physicians Practice, a leading practice management resource, has examined the implications of the historic Supreme Court healthcare decision. Eschewing opinion about John Roberts or the impact on insurance company stock prices, the coverage helps physicians understand what it means for them.  Offering commentary as well as analyzi ...

When Do Too Many Active Shareholders Hurt Instead of Help? At Forbes, Lawrence Siff relates his conversations with CEOs of two family businesses, discusses the challenge of bringing in new leadership, and offers tips on how and when to go about it:  ...

J.P Morgan Chase, Morgan Stanley Make New Hires.  Other Banks May Follow in Move to Increase Accounting Credibility    At the Wall Street Journal's Overheard On the Street blog David Reilly reports that JP Morgan Chase and Morgan Stanley have made new accounting hires.  Other banks may soon follow suit:    ...

Mandate Survives as a Tax.   Limits on How Widely Feds Can Control States Medicare.   No Other Limits. Brent Kendall, Louise Radnofsky, and Jess Bravin of the Wall Street Journal report the news: ...

Bankers Say M&A 'Good for Good Companies' Which Can Often be Sold for 9-10x Earnings  Luisa Beltran at PE Hub wonders:   "Is there an M&A slowdown?"    ...

At issue in Gross v. Commissioner is whether the petitioner made an indirect gift of public company stock to her daughters, thus negating any discounts for lack of control or marketability.  Judge Halpern at the Tax Court ruled that the step transaction was not applicable and that a 35% discount was justified.  Find out why. ...

The Financial Professional's Guide to Healthcare Reform; Accountants' Handbook, 12th Edition New titles from Wiley this summer include Scott Miller on Buyouts, Dietrich and Anderson’s thorough Financial Professional’s Guide to Healthcare Reform, Roman Weil et al. on Litigation Services and the Financial Expert, and Graham and Carmichael’s Accountants' Handbook, 12th Edition.  ...

Why The Black-Scholes Model Overvalues Conversion Options. The Black-Scholes method was the predominant model for many years, and was even endorsed by accounting rules prior to the introduction of FAS 157, even though it was never intended to be used for valuing complex securities or illiquid assets. Some have substituted lattice models or Monte Carlo simulation, making modifications or adjustment to attemp ...

How to graphically illustrate ratio analysis as a way to enhance and simplify summary findings. A key to providing clients with effective valuation reports—and persuading jurors as an expert witness—is the ability to provide quantitative analysis in a compelling visual fashion. Here, Greg Gadawski and Darrell Dorrell provide an example of how to graphically illustrate ratio analysis as a way to enhance and ...

An Introduction for Wealth Managers and Business Owners to the Concept of Managing Pre-Liquid Wealth What is the solution to financing the expenditures necessary to manage the wealth that is tied up in closely held businesses? The solution is so obvious that we overlook it, thinking that such activities either are too expensive, too time-consuming, or worse, not a high priority. For owners of closely held b ...

Uncertainty Surrounding the Court's Pending Decision Causes Transaction Delay  Private Equity International's Graham Winfrey reports that whatever way the Supreme Court rules on healthcare may end up driving more industry activity.   ...

Are Deficiencies More Common?  Or is it Simply that PCAOB Now Successfully Targets Audit Areas Prone to Problems? Emily Chasan at the Wall Street Jurnal's CFO Report delivers the news that The Public Company Accounting Oversight Board has been catching an increased number of audit errors around fair value measurement this year, says PCAOB member Lewis Ferguson. He notes that audit regulators around the worl ...