• Litigation Consulting - QuickRead Top Story

    Estimating Lost Profits for a Self-Employed Business

    March 5, 2025

    What are a Self-Employed Person’s Earnings? What are Their Profits? This article will discuss some of the unique factors relating to assessing lost profits for self-employed operated businesses. As examples, two extremes will be discussed. These extremes provide virtual bookends when assessing a claim of lost profits by a self-employed person. The first addresses a self-employed person who reports his/her income through a Schedule C, Sole Proprietor. The second addresses self-employed individuals that own and operate a subchapter S corporation and file an 1120S for that business. Financial experts will often be asked to estimate the lost earnings or lost…

  • Litigation Consulting - QuickRead Top Story - Valuation/Appraisal

    Lost Profits

    September 8, 2021

    Questions from the NACVA Conference Regarding Discounting Lost Earnings for Self-Employed Individuals In June 2021, the author of this article made a virtual presentation at the NACVA and the CTI’s Business Valuation & Financial Litigation Hybrid & Virtual Super Conference. The presentation was “Estimating Economic Loss of the Self-Employed: Lost Profits or Lost Earning Capacity”. One of the attendees asked a very good question regarding discounting future losses to present value, which is the main focus of this article. In June 2021, I presented a virtual session at the NACVA and the CTI’s Business Valuation & Financial Litigation Hybrid &…

  • Financial Forensics - QuickRead Featured - QuickRead Top Story

    Analyzing Lost Earning Capacity for the Self-Employed

    August 17, 2016

    Income of Partners and Owners of Pass-through Entities (Part II of II) This is the second part of a two-part article where the author discusses the methodology for assessing the lost earning capacity of a self-employed person. This article provides an overview for analyzing the lost earning capacity of the self-employed and discusses why this category of work provides unique assessment situations. In this second part, the author discusses how to address fringe benefits, worklife, mitigation, the value of a business.

  • Litigation Consulting - QuickRead Featured - QuickRead Top Story

    Analyzing Lost Earning Capacity for the Self-Employed

    August 10, 2016

    Income of Partners and Owners of Pass-through Entities (Part I of II) This is a two-part article where the author discusses the methodology for assessing the lost earning capacity of a self-employed person. This, basically, is the same as that for a traditional wage and salary worker. Even though the methodology is the same, assessing the data for the self-employed is different. The loss calculations are not just based on W-2’s or payroll stubs as may be used for traditional wage and salary employees. Data from differing Internal Revenue Service forms used for reporting business income must be reviewed. In…