A rough ride This article examines recent state legislation in Georgia that requires entertainment production companies and their payroll providers to withhold state income tax on payments made to loan-out companies as a prerequisite to claiming tax credits. Peter Stathopoulos examines the difficult transition involved with this legislation that may spawn similar proposals in other states that host a large amount of filming projects.
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Financially-sound companies can more easily obtain lines of credit at low interest rates, as well as more easily issue debt financing or issue bonds on better terms. Companies often take advantage of loopholes to present themselves as more profitable than they are. Most do it in a way that they’re not technically breaking the law, but ethics certainly come into question. When should you be concerned and when is the line crossed between creative accounting and fraud? Rakis Christoforou examines this subjective dilemma in an overview published in the FinancialMirror. In a short but valuable look at the subject of…
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Things change because markets are not logical; markets are emotional. In an analysis featured on CNNMoney.com, Ben Horowitz lays out the specific challenges of raising capital and valuing startups in the current economic climate. In an eye-opening comparison, he looks at the price/earnings ratios (P/E) of all S&P 500 IT companies for the last 18 years. With this wide of a time span, one might expect some form of predictability or modest stability to appear. In fact, the results fluctuate so wildly that the average company with $10 million in earnings and valued at $210 million in 1995 would have…
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Nothing simple about interest The takeaway from current research and practice within the forensic financial analyst profession is to stay current on methodology and to conduct your analysis in such a manner that can be explained and defended.
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An alternate business valuation report format This article briefly describes an alternate format for business valuation (BV) reports that can make them more understandable.
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Structured settlements are a useful tool, but not always advisable! There is plenty of acrimony in marital dissolutions. One way to possibly address the financial concerns of all and reduce acrimony is to consider the use of a structured settlement. A structured settlement replaces one lump payment with smaller payouts over time. It’s a concept frequently used in workers’ compensation or tort cases, but more often, these types of settlements are also being used in divorces. The structured settlement can be an effective tool or prolong the ill will and costs of divorce.
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In their recently released Beige Book, the Board of Governors of the Federal Reserve System break down the economic performance of the nation within seven business sectors across 12 metropolitan economic districts. Prepared at the Federal Reserve Bank of San Francisco, the findings are based on all data collected on or before August 26, 2013. Business sectors covered include consumer spending & tourism, nonfinancial services, manufacturing, real estate & construction, banking & finance, agriculture & natural resources and employment, wages & prices. Participating districts include Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and…
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In the first installment of a two-part series, the AICPA reviews the most important developments affecting estate, gift and generation-skipping transfer (GST) tax and trust income tax over the last 12 months. In the period from June 2012 through May 2013, the analysis covers legislative developments, rulings, pending cases, the American Taxpayer Relief Act of 2012 and inflation adjustments for 2013. The second installment, coming in October, will focus primarily on GST and estate tax issues. [button link=”http://www.aicpa.org/Publications/TaxAdviser/2013/September/Pages/Ransome_Sep2013_2.aspx” color=”silver”] View Full Article[/button]
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Understanding this critical element in a buy-sell agreement Traditionally, business appraisers retained for buy-sell agreements are bound to perform their services within the specific value structure of the contract. When the valuation process is involved in such agreements, it’s essential for estate planners to understand the defining valuation elements involved, particularly the level of value.
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Failure to make capital contributions did not void the operating agreement or reduce the ownership interest of non-complying partners In Grove v Brown, the Delaware Court of Chancery, relying on the unambiguous terms of a limited liability company (LLC) operating agreement, found that a member’s failure to make an initial capital contribution to a LLC did not affect that member’s ownership interest. Further, the Court of Chancery, applying default fiduciary duties to the managing members found that two managing members breached their fiduciary duty of loyalty under the corporate opportunity doctrine.
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Garner v. Knoll, Inc.—the mathematics of a hypothetical liquidation analysis A preference payment is subject to recovery by the debtor’s estate. Having to return a “preference payment” may come as a surprise. In this case, the issue before the court is whether a creditor received far more than what it would have received under a Chapter 7 liquidation. The case illustrates the mathematics used in conducting (a basic) hypothetical liquidation.
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Value metrics and capital formation Robert Cimasi serves as chief executive officer of HEALTH CAPITAL CONSULTANTS (HCC). Mr. Cimasi’s firm is a nationally recognized healthcare financial and economic consulting agnecy headquartered in St. Louis, MO, serving clients in 49 states since 1993. He is author of a three-volume set that offers a comprehensive reference guide to the factors involved in consulting with and valuing healthcare practices. In this article, Mr. Wandtke reviews Volume Two, Professional Practices. See http://www.healthcapital.com/advisersguide.
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According to the US Bureau of Economic Analysis, “research and development” (R&D) are now considered a fixed investment. The report, released last month, contains GDP figures categorizing R&D with this distinction. R&D now joins software in a new category labeled “intellectual property products”. While some see the change as only affecting a small number of economists, others see the move as bridging a gap between digital economy and the way analysts account for it. McKinsey & Company provide a solid review of what the change means here. “[Intangible digital capital assets] are manifold: the unique designs that engage large…
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Valuing Nokia Siemens Networks Nokia Corporation is bound to look very different after Microsoft buys its devices division. When the initial purchase was announced, most in the industry were shocked. The bigger question is: How much will the remaining parts of the company be worth once the deal is done, and how should they be valued? Analysts from JP Morgan Cazenove provide a very interesting breakdown in a feature first published by Valuewalk.com. “The analysts set Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s patent licensing business apart, calling it a “new separate business at Nokia.” As a result, they said it also…
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Testing the high risk waters in today’s business environment The absence of a fraud risk management (FRM) program exposes a company to financial losses and legal liability if a fraud investigation is not properly handled and the employee is wrongfully discharged, or his or her privacy rights are violated. A FRM program addresses the above concerns and establishes controls every company should have to identify risk factors.
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Wave of boomers fuel business acquisition market This article examines the upswing in the business acquisition market as holdouts from 2009 and 2010 are freed up, as well as the increasing number of baby boomers looking to move into the next phase of life.
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Working within the DLOM ambiguity This review examines the impact of volatility as a risk factor in the discount for lack of marketability (DLOM) and answers questions regarding the flexibility of adjustment periods.
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Equity creditor appointment standards and lessons for hiring business valuation professionals from Kodak’s bankruptcy This article provides an overview of the Eastman Kodak bankruptcy case and focuses on the standard a bankruptcy court will use deciding whether to appoint an official equity creditors’ committee. It also explains why the bankruptcy court granted Kodak’s motion in limine to exclude‒under Daubert‒the opinion of two expert witnesses retained at the eleventh hour by the shareholders.
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As corporations and their CFOs prepare to launch their 2014 budgets, Michael R. Press of M. R. Press Consulting, writing for CFO.com, points out ideal opportunities to maximize ROI through tax incentives at the state and local levels. In a tightly-detailed, three step approach, Press explains that with the right goal criteria, corporations can recoup virtually all of the initial investment capital related to these regulations. “It’s important to know that the way a company’s business units define projects for capital budgeting purposes is not the same as the way the government defines economic development “projects” supported by incentives. This…
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The IRS recently issued regulations (T.D. 9630) affecting how the differential income stream approach applies to cost-sharing agreements. Nearly two years ago, “final” cost-sharing rules were published under Sec. 482. This newer round of regulations is intended to ensure that cost-sharing agreements are in line with Sec. 482’s commensurate-with-income principle. In its earlier attempt to guarantee pricing practice in all cost-sharing agreements, the IRS instituted the income, acquisition price, and market capitalization methods. The motives of the IRS and a summary of the new regulations are provided by Sally Schreiber, senior editor at the Journal of Accountancy, along with links…