A Note on ESOP Valuation[1] One of the most critical issues regarding valuation is the concept of adequate consideration.  The ESOP trustee cannot pay more than “adequate consideration” for the stock it purchases.[2]   In the context of an ESOP, ERISA defines adequate consideration as the stock’s “fair market value…as determined in good faith by the trustee…”[3]  The proposed Department of Labor regulations ...

Simple Steps to Save Hundreds of Thousands of Dollars By implementing just a few simple steps and procedures, business owners can catch or prevent financial fraud that can have devastating financial and personal consequences. In this article, Chris Hamilton outlines six simple steps business owners can put into practice today. ...

Evolving Accounting Standards for CPAs Wiley author Joanne Flood reviews three significant Accounting Standards Updates (ASU).  First, she reviews ASU 2014–08, issued in April 2014. This ASU focuses on Reporting [for] Discontinued Operations.  This ASU changes the criteria for determining which disposals can be presented as discontinued operations.  In the remaining portion of the article, she summarizes ch ...

Business valuation (BV) liability claims are not as frequent compared to other litigation risks faced by practitioners. On the other hand, there are BV-related liability claims that exist, especially in cases where a valuation report was used to guide financial decisions by businesses, lending services, regulatory agencies, and others, according to Frank Vinluan, in the January 21 issue of FVS News.   ...

Ninth Circuit Court of Appeals Reverses U.S. Tax Court On December 5, 2014, the Ninth Circuit Court of Appeals “reversed and remanded for recalculation of value” a Tax Court Memo decision in Estate of Natale B. Giustina, Deceased, v. Commissioner (No. 12-71747). The case involves the valuation of a 41.128 percent partnership interest in Giustina Land and Timber Company Limited Partnership and raises importa ...

A Case Study, Part 2 of 2 In this second part of the article, Dr. Allyn Needham examines post-Till cases from the northern and western districts of Texas, highlights the problems encountered using the Formula Approach, and tests whether the Contract Approach may have provided a better approach and reduced the incidence of litigation where a cramdown is proposed. Ultimately, Dr. Needham proposes that despite ...

Because of stock market volatility, taxpayers may want to convert to Roth individual retirement accounts.  Taxpayers, after converting to the Roth, have until October 15 to undo it, as long as the conversion is set up correctly, says Robert Keebler, partner, Keebler & Associates LLP, in The Ultimate Estate Planner Blog. Image courtesy of Stuart Miles/FreeDigitalPhotos.net ...

The American Institute of Certified Public Accountants (AICPA) has sent a letter urging Rep. Paul Ryan (R–Wis.), the new chair of the House Ways and Means Committee, to follow the AICPA’s principles of good tax policy to guide tax reform. The letter comes in response to the Tax Reform Act of 2014, a draft proposal put forth by the former Ways and Means chair Dave Camp (R–Mich.). The AICPA’s letter addresses ...

A Case Study, Part 1 of 2 In the Till decision, the U.S. Supreme Court selected the Formula Approach to provide a straightforward, familiar, and objective method for determining the cramdown interest rate to be paid on secured claims in Chapter 13 cases, minimizing the need for potentially costly additional evidentiary proceedings. Many bankruptcy courts have found this decision instructive and directive fo ...

Valuators Take Note Fair market value is key to compliance with both the Stark Law and the Anti-Kickback Statue. Solid, well-reasoned valuations can be essential in establishing compliant arrangements, and these must consider practice losses as applicable. In this article, Lynn Gordon, Esq., states that it is “prudent to have a valuation in place that supports compensation as fair market value,” especially ...

Federal Reserve officials have expressed growing optimism at the December meeting that the U.S. economy is steadily recovering.  As the price of oil continues to fall and with payrolls growing, there is a good possibility that 2015 will experience higher economic growth than currently forecast. However, the weakness of the global economy and the anemic response of foreign governments could weigh on domestic ...

The Treasury Department and Health and Human Services announced last week that in the coming weeks it will introduce “consumer-friendly” resources for taxpayers to use to comply with the new healthcare rules. Starting this year, taxpayers are facing additional paperwork for this year’s filing, causing concern for taxpayers and their accountants. Tax filers will now have to report whether they had healthcare ...

Restrictions on Distributions and Impact on DLOM…Who Else Will Follow? In 2009 Nevada Senate Bill 350 was passed into law. This law authorized the creation of two new business entities: the Restricted LLC and Restricted LP. The bill also allowed for the conversion of existing entities into one of the above types. In this article, Eric J. Barr provides an overview of these two entities and raises questions r ...

Thoughts on How Valuation Professionals Can Recognize and Quantify the Value of Strategy What is strategic planning? How does a valuation professional adding value to the client recognize strategic planning? Quantify strategic planning? Michael Porter observes that the whole subject of strategy has become too confusing. It seems that everything is strategic; otherwise, it is not really that important. We ha ...

Despite all the talk about new changes underway now that Republicans will assume control of Congress and governorships in 31 states, much of the current tax issues will look the same in 2015 as they did in 2014, according to Forbes. Below is a snapshot of the top nine tax stories to watch in 2015: Business Taxes.  Will 2015 be the year of business tax reform? Probably not, according to Forbes, as the Afford ...

How to Implement Value Pricing in Your Firm, Part 3 In this third article of the three-part series, Ronald Baker discusses how to implement a value pricing model and the advantages this model presents over the hourly billing model. Again, the focus is on the value provided to the customer and communicating this to clients. Read Part 1 and Part 2. ...

The Art of Licensing Your Trademark What is the value of a name? A trademark? In this article, the authors discuss the traditional valuation approaches and their limitations deriving the fair market value of the trade name. ...

“Rome was not built in a day,” but efforts are underway to do it faster for international valuation standards. At the recent World Congress of Accountants, Sir David Tweedie, chair, International Valuation Standards Council, outlined the challenges facing the valuation profession when he stated and questioned the following: “The profession developed as secondary specialization by experts working in differen ...

Thanks to the U.S. Senate, IRA owners age 701/2 and older have until Wednesday, December 31, 2014, to make a direct transfer from their account to an eligible charity of their choice of up to $100,000 without paying taxes on the distribution. The senate approved the direct rollover in addition to more than 50 other tax provisions as part of the extender’s package on December 16, 2014—just two weeks shy of t ...

How to Implement Value Pricing in Your Firm In this second article of the three-part series, Ronald J. Baker challenges professionals to move from value billing to value pricing. Value pricing inverts the hourly billing model by recognizing the economic facts that it is the customer who is the ultimate arbiter of value. If value is created, the customer understands that cost is secondary. ...