• Divorce court wrestles with ‘vague and conflicting’ goodwill testimony

    Goodwill in a professional partnership poses unique challenges for valuators and courts, especially in a divorce setting. In a recent Texas case dense with valuation issues, it came down to corporate goodwill. “Logic tells me there is some,” the trial court said, “but it’s probably impossible to quantify.” The finding triggered an appeal.
  • Bogdanski says BV cases took ‘back seat’ in tax court this year

    The big news, says Prof. Jack Bogdanski (Lewis & Clark Law School) in his seventh annual symposium on developments in federal tax valuation, is that there were hardly any business entity valuation cases. Unlike last year, when cases involving family limited partnerships (FLPs) were aplenty, this year the Internal Revenue Service seems to have poured its resources into challenging taxpayer claims for charitable contribution deductions related to conservation and facade easements. The latter, in particular, have become a mass-marketing tax shelter tool in areas such as New York City and have triggered a vigorous response from the IRS. Litigation typically focuses on whether the appraisal is qualified, whether the expert testimony was admissible under Daubert, and finally—assuming the case is still alive—what the value of the restriction is.
  • Valuations high for private firms, says new Pepperdine report

    The value of privately held businesses is very high right now, according to the 2014 Capital Markets Report from Pepperdine. This annual report benchmarks both the current climate and projected outlook across multiple market segments for lending, investing, and acquiring capital.
  • Ownership transition

    Business owners planning succession face the difficult decision of whether to sell, dissolve or transfer their business to family members. Learn ways valuators can help guide the succession planning process by looking at such factors as the company’s expected cash flows, perceived risk, expected growth and marketability.
  • Valuing an S corporation

    The issue of whether valuators should “tax-affect” an S corporation’s earnings — that is, reduce earnings by an assumed corporate tax rate — continues to be controversial. The U.S. Tax Court rejected the practice in 1999, claiming that tax-affecting was inappropriate in valuing an S corporation. But in recent years several courts have embraced the concept, choosing a middle ground that better reflects an S corporation’s value. This article looks at a couple of recent cases, while a sidebar indicates that the Tax Court might revisit tax-affecting if the right case comes along.