Davis v. Commissioner (II)
Eleventh Circuit upholds Tax Court’s $36.9 million valuation of executive stock option, finding that by using the parties’ negotiated formula for the number of shares equaling $16 million at the date of exercise and declining to apply a marketability disc ...
Grieve v. Commissioner
In gift tax dispute, Tax Court rejects IRS expert’s valuation of noncontrolling, nonmarketable interests in two LLCs; expert proposed valuation theory and method were intended to lower opposing experts’ minority and marketability discounts but lacked support in facts, case law, or among peers.
Aspro, Inc. v Commissioner
The U.S. Tax Court recently agreed with the Internal Revenue Service that management fees a corporation paid to its three shareholders over a three-year period were not deductible since none of the fees were paid “purely for services” and the petitioner failed to show the fees were “ordinary, necessary, and reasonable.” Rather, they represented disguised distributions, the court found.
Estate of Richmond
Tax Court favors net-asset-value over capitalized-dividend approach for FMV determination of interest in holding company with marketable securities because NAV starts out on “firm ground” with stock prices one can look up whereas income approach relies en ...
Daubert Report Excerpt
Book Excerpts
This special report equips practitioners with case law, sample motions, practice tips, and check lists. In the report's nearly 350 pages, financial experts and lawyers share their unique insights into what it means to face a Daubert challenge and what it takes to survive one. No expert hoping to excel in the litigation arena can afford to be without this unique practice tool.
Goodwill in Divorce Valuation: Personal, Entity, and the Difference Between
At times, it would seem that "goodwill" is synonymous with "challenging valuation for marital dissolution." In dividing an estate, recognizing, analyzing, and apportioning both entity and personal goodwill can foil the most experienced appraiser and render the most nuanced valuation inadmissible. The second installment of the Advanced Webinar Series on Business Valuation in Divorce features series curator Jim Alerding on all things related to personal and entity goodwill. From identification and analysis to considerations of how ...
Hoensheid v. Comm’r (In re Estate of Hoensheid)
The taxpayers made a valid gift of stock, but they realized and recognized gain because their right to the proceeds from the sale occurred before the gift was made. They also were not entitled to a charitable contribution deduction because they did not procure a qualified appraisal. The taxpayers were not liable for an underpayment penalty.
Nelson v. Commissioner
In gift tax case, Tax Court finds donor transferred percentages in limited liability company rather than fixed dollar amounts based on language in transfer instruments; further, where transferred minority interests include elements of control, minority discount should be reduced, not eliminated.
Tax Affecting S Corporations: It’s Not a Matter of Whether. It’s a Matter of When
The propriety of tax affecting S corporations is not a question of right or wrong; rather, the question is when it is appropriate to tax affect S corporations in business appraisals. The standard of value required determined the answer. Under the fair mar ...
Champions Retreat Golf Founders, LLC v. Comm’r
The Tax Court, on remand from the 11th Circuit, which decided that the taxpayer was entitled to a charitable donation for donation of a conservation easement, now valued that interest to determine the amount of the donation deduction. Both parties presented valuation opinions from expert appraisers. The Tax Court determined that the highest and best use of the property before and after the grant of the easement was the key to the determination of the value of the easement. The Tax Court then analyzed the evidence from the expert appraisals to arrive at a value of the easement.
Discounts for Lack of Marketability Guide Excerpt
Book Excerpts
In the fifth edition of BVR's Guide to Discounts for Lack of Marketability, John Stockdale, Sr. offers the newest treatise on the theories, evidence, and techniques for determining discounts for lack of marketability (DLOM). DLOM is one of the most discussed topics in the business valuation profession with a historically wide divergence in how valuators approach it.
Negotiated Formula for Stock Option Price Obviates DLOM Need
Eleventh Circuit upholds Tax Court’s $36.9 million valuation of executive stock option, finding that by using the parties’ negotiated formula for the number of shares equaling $16 million at the date of exercise and declining to apply a marketability disc ...
Why Pre-IPO Studies Are Unsound in Concept and in Practice
This article explains why pre–initial public offering (IPO) studies are not a valid basis for determining marketability discounts. They are unsound in concept because the pre-IPO transactions and the subsequent IPO are priced at materially different dates and because the IPO price is not knowable at the earlier date. They are unsound in practice for several reasons, such as selectivity—the data include only companies that subsequently become publicly traded—and the fact that any pre-IPO discount ...
Select Court Opinions from BVLaw
Free Downloads
See select court opinions from the BVLaw database including Adams v. Commissioner, Estate of Andrews v. Commissioner, Bardahl Manufacturing Corp. v. Commissioner, and many more.
Estate of Aaron Jones v. Commissioner
In gift tax dispute, Tax Court adopts estate expert’s valuation of two related PTEs, including expert’s tax affecting; court distinguishes Gross and later cases; issue is not whether to tax affect but how; estate expert’s tax affecting was “more accurate than [IRS’] blunt zero-rate approach.”
Estate of Bessie I. Mueller v. CIR
The Tax Court rejected the estate's claim for equitable recoupment of taxes paid based on a valuation of the estate's stock. The estate reported the value of the stock to be $1,505 per share; however, 67 days after the valuation date it sold the stock fo ...
In re Marriage of Broesder
High court says trial court erred when it failed to consider tax implications where its final order appears to make sale of family ranch a necessity; evidence suggests there are no other assets with which to buy wife’s shares of ranch corporation at FMV.
Is the Lingering Criticism of Using Pre-IPO Studies for DLOM Justified?
The use of pre-IPO studies to measure a discount for lack of marketability has gained acceptance among valuation analysts and the Tax Court even though the method continues to be a target of some criticism. Of course, criticism can be made of all data tha ...
Economic-Damages-2018-Excerpt
Book Excerpts
The Comprehensive Guide to Economic Damages, Fifth Edition edited by NancyJ. Fannon and Jonathan Dunitz, bridges the gap between the economics in damages cases and what the courts say about the calculations and evidentiary requirements.
Estate of Koons v. Commissioner
In determining the fair market value of a revocable trust’s interest in an LLC, the Tax Court adopts the IRS expert’s marketability discount and valuation; he rightly assumed it was reasonably foreseeable at the time of the decedent’s death that the trust ...
Blockage Discounts: How Volume Can Impact Value
Join Pasquale Rafanelli for an exciting look into the complex topic of blockage. Learn what blockage is and how to apply it when valuing securities, stocks, and even artwork. Understand how blockage is different than a discount for lack of marketability. With real-world examples that are applicable to your practice, this event will help you build a defensible conclusion.
Valuing Marketable Securities Portfolios
Given the expected reduction in the estate tax exemption, the use of privately-held marketable equity securities (MES) portfolios as a wealth transfer vehicle is likely to increase. Join Gary Gerlach to learn the ins and outs of valuing these investment vehicles. We will cover the use of multiple (free) sources of closed-end mutual fund (CEF) data and discounts and analyze and select guideline CEFs, focusing on metrics such as asset type, concentration and allocation issues ...
Detailed_Report_For_An_Estate
Sample Reports
51 PERCENT INTEREST IN RONALD K. MORRISON AND ASSOCIATES, INC. VALUATION REPORT NOVEMBER 13, 2020 © TRUGMAN VALUATION ASSOCIATES, INC. 2021 April 19, 2021 Crenshaw Hayes LLP 77 Brightline Avenue Randolph, NJ 07111 Attn: Anthony Y. Young, Esq. Re: Valuation of 51 percent interest in Ronald K. Morrison and Associates, Inc. Dear Mr. Young: We have performed a valuation engagement, as that term is defined in the Statement on Standards for Valuation Services (SSVS) of the American Institute of Certified Public Accountants of Ronald K. Morrison and Associates, Inc.