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 [...]
More background on Ringgold victory, in which industry experience held sway with the Tax Court
Ringgold Telephone Co. v. Commissioner., T.C. Memo. 2010-103, 2010 WL 1850426 (U.S. Tax Ct.)(May 10, 2010) BVLaw Alert subscribers have been alerted to the trend for an expert witness’ industry experience to trump professional background. We’ve mentioned several cases, including one of the most interesting, Ringgold. Ringgold, the taxpayer, provides telecommunications services in Georgia and Tennessee. [...]
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 [...]
Value of tiered minority ownership interests causes Tax Court battles
Discounts for lack of marketability and adjustments for minority interests are tough enough, but when the when limited partnership structures get complicated, with multiple ownership “tiers,” these adjustments can take on a life of their own. On May 27, William Frazier (Howard Frazier Barker Elliot) and John Porter (Baker Botts) will address these valuation challenges in “Valuing [...]
Buy-Sell value stands after expert is discredited in shareholder buy-out case
In re White, 2010 WL 786292 (Bkrptcy. S.D. Tex.)(March 4, 2010) The federal bankruptcy court first found that $4.9 million in executive bonuses paid by a profitable construction equipment company over a span of two years (2006 and 2007) were in fact disguised dividends. “Uncontroverted” testimony at trial established that the company paid shareholder-employee bonuses [...]
8th Circuit confirms Holman and IRS’s new weapon against FLPs
Remember Holman v. Commissioner (May 2008), in which the taxpayers gifted substantial holdings of Dell stock into a highly restricted family limited partnership (FLP)? The Tax Court agreed with the IRS, finding the transfer restrictions were merely tax avoidance devices and should be disregarded for valuation purposed under IRC Sec. 2703. Further, the Tax Court [...]
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