December 2018—U.S. Tax Court on Qualified Appraisals and Gill v. Gill, Minnesota’s Supreme Court Rules on the Status of Earn-Outs in Dissolution Cases The U.S. Tax Court issued two valuation memorandums in September and October 2018. Each memorandum serves as a reminder of the importance of attaching a qualified appraisal. The issue in Presley v. Commissioner, T.C. Memo. 2018-171 (October 15, 2018) was whether petitioners were entitled to charitable deductions claimed in 2010 relating to land improvements paid before 2010 that benefitted a religious charity. We cite pertinent portions of this decision since it involves tax planning and the importance of…
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Case Law Update February 2018 In this case law update, we review one U.S. Tax Court case that provides guidance regarding when is a bad debt business loss deductible and whether contributions of money to a business is equity or debt. In addition, we present several Delaware Court cases; one of them, a post-dissolution case where one NACVA member (and another inactive member) testified and the court addressed the S corporation tax affecting and availability of discounts for lack of marketability. The issues raised there are frequently raised in other dissolution actions and the reasoning provided by the court regarding…
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Transition Period Payments After a Business Acquisition Owner’s of closely held businesses will usually be required to remain active in the business after the same is sold. This article examines two key questions related to such post-transaction transition payments: (1) how much should the buyer pay to the sellers for these transition period services, and (2) how should these transition period payments be structured?