New SEC private company stock rules-–and new markets for minority shareholders–offer new opportunities
Last month the SEC sent a letter stating that the agency is “moving toward easing decades-old constraints on share issues by private companies, in a sweeping review that could remake the way American start-ups raise capital,” says Jean Eaglesham in the Wall Street Journal. Learn what possible changes could alter both the liquidity and marketability [...]
Fractional interest in estate tax turns on type, timing of gift
Estate of Adler v. Commissioner of Internal Revenue, T.C. Memo. 2-11-28, 2011 WL 300144 (U.S. Tax Court)(Jan. 31, 2010) A father owned a California ranch on more than 1,000 acres. In 1965, he gifted undivided one-fifth interests to his five children as tenants-in-common, reserving his own “full use and control” of the property throughout his [...]
New case digests added to BVLaw
Metro Tech Corp. v. TUV Rheinland of N.A., 2010 WL 4117123 (D. Puerto Rico.)(Oct. 18, 2010); and Metro Tech Corp. v. TUV Rheinland of N.A., 2010 WL 4117115 (D. Puerto Rico.)(Oct. 18, 2010) Court limits damages to breach of contract to those that can be ascertained with reasonable certainty, and qualifies first-time lost profits plaintiff’s [...]
Redundancy in DLOMs may violate Daubert
Nancy Fannon (Fannon Valuation Group) recently told BVLaw Alert that “Dr. Robert Comment (Johns Hopkins University – Carey Business School) has written what I think is an important perspective regarding redundancy that exists in the large DLOM adjustments many appraisers take in their valuations.” The abstract from his paper “Business Valuation, DLOM and Daubert: The [...]
IRS, Tax Court judges keynote Georgetown Law/BVR tax and valuation conference
In their only joint public meeting this year, three of the most important leaders from the Internal Revenue Service will discuss the implementation, enforcement, and appeals of Service regulations at the Advanced Summit on Business Valuation: Resolving Tax & Legal Issues, presented by BVR and Georgetown School of Law. Moderated by Jay Fishman, an expert appraiser and member [...]
LLC structure withstands IRS challenge; then taxpayer wins discount battle
Pierre v. Commissioner, 2010 WL 1945779 (U.S. Tax Ct.)(May 13, 2010) BusinessValuationLaw.com readers may remember the Tax Court’s first opinion in these proceedings. In Pierre v. Comm’r, 2009 WL 2591652 (Aug. 24, 2009)(Pierre I), the taxpayer formed a single-member family limited liability company (LLC). In assessing deficiencies of over $1.13 million, the IRS argued that [...]
Key cases lawyers need to know on the “discount rate”
Most lawyers underestimate the impact the discount rate can have on determining the value of a company for family, tax, securities, corporate, bankruptcy, ESOP, damages/lost profits, and other legal matters. We checked BVLaw and found two very recent bankruptcy cases to add to other precedential decisions, for a total of 13 “must read” cases for [...]
Co. Supreme Court affirms minority discounts in family law cases
The Colorado Supreme Court just affirmed the use of discounts for lack of marketability (DLOM) in the Thornhill case. Without explicitly altering the legal standard of value in the state (value to the owner), the decision gives the lower courts the option to accept fair market value, along with value to the owner (including marketability and [...]
Dunn to attorneys and experts in damages cases: stay alert to the power of the discount rate
“In my experience, most lawyers don’t understand the power of numbers, and they may ignore the discount rate in preparing for trial,” attorney and author Robert Dunn told attendees at last week’s 24th Annual Seminar by the Valuation Roundtable of San Francisco in Oakland, CA. “To a lawyer, 8% versus 12% may not sound like [...]
Ludwick v. Commissioner: Tax Court devises its own weighted approach to value an undivided real property trust
A decision last Monday by Judge Halpern of the U.S. Tax Court implies a tougher stance on discounts for real property interests. The facts in the new decision, Ludwick v. Commissioner, are as follows: A California couple owned a vacation home on Hawaii’s Big Island as tenants in common. In 2005, they transferred their separate, [...]
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