Sales of New Homes in Metro Phoenix Surge in July

Posted on August 26 2015 by admin

Many economists believe this year’s surge in homebuilding is beginning to look more and more like a real recovery of the Valley’s new-home market.

New Home Permits Issued in July 2015 are 55% Higher than Prior Year

The Phoenix Housing Market Letter published by RL Brown and Greg Burger reports that:

  • New home sales were up 10% in July 2015 versus July of 2014.
  • 1,592 permits were issued in July 2015 for new houses compared with 1,024 in July 2014, reflecting an increase of 55%.
  • Year-to-date new home construction permits were up 39% compared to the same seven month period in 2014.

The newsletter attributes the recent increase in new-home construction and sales to improvements in the region’s economy, more existing homeowners able to sell and buy a new house, and boomerang buyers who lost houses to foreclosure who are now able to qualify for mortgages again.

Median Price of New Homes in July 2015 is 28% Higher than Median Price for Existing Homes

The median price of new houses sold in metro Phoenix during July reached almost $300,000, which is about $83,000 more than the median price for an existing Valley house.

  • Is it Time to Celebrate a Local and National Housing Recovery?

According to an August 18, 2015 CNBS article, U.S. housing starts rose to an eight year high in July of 2015. Housing starts have now been above a one million-unit pace for four straight months.

With that said, the recent plummet of stock prices will definitely affect consumer confidence and could tighten bank’s lending criteria. Let’s hope that new construction will continue to outperform last year’s numbers and contribute to the recovery of the local and national economy.

By Gary Ringel, CGREA

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Forensic Accountants: What Makes Them Effective – or Not?

Posted on August 11 2015 by admin

ForensicI have been performing forensic accounting services for clients since 1984. During that time, I have heard many definitions of “forensic accounting services” from other CPAs, seminar instructors, and attorneys. The American Institute of CPAs (“AICPA”) has a practice aid[1]  (“Practice Aid”) which gives the following definition of forensic accounting services:

“Forensic accounting services generally involve the application of specialized knowledge and investigative skills possessed by CPAs to collect, analyze, and evaluate evidential matter and to interpret and communicate findings in the courtroom, boardroom, or other legal or administrative venue. More simply, in a litigation context, the term forensic means to be suitable for use by a court of law.”

The Practice Aid states the following about the different types of forensic accounting services:

Forensic accounting services include dispute resolution, litigation support, bankruptcy support, and fraud and special investigations, among many other services. Forensic accounting services utilize the practitioner’s specialized accounting, auditing, economic, tax, and other skills to perform a number of consulting activities. The provision of forensic accounting services often requires the practitioner to serve as an expert or fact witness, depending on the assignment.”

In a white paper published by the AICPA[2], the following key observations regarding forensic accountants were stated in the Executive Summary of the white paper:

  1. The authors surveyed and received responses from 126 attorneys, 603 CPAs and 50 accounting/auditing professors in June 2009 to better understand the current perceptions of what it means to be an effective forensic accountant.
  2. The survey found that 60% or more of the attorneys ranked being analytical, detailed-oriented and ethical as essential traits and characteristics. All three respondent groups agreed that being analytical was the most essential characteristic for the forensic accountant to possess.
  3. Despite common traits and characteristics identified by all three respondent groups, only attorneys ranked effective oral communication as their top core skill for forensic accountants and that was followed by the forensic accountant’s ability to simplify the information. Auditing skills were ranked fifth, in a top-five (“Top 5”) ranking, by the attorneys, and ranked second by the academics but were not ranked in the Top 5 by the CPAs.
  4. More than 80% of the attorney respondents identified inability to simplify the information and ineffective oral communication skills as the top-two reasons why forensic accountants are ineffective, which is consistent with their Top 5 ranking of core skills for forensic accountants. The CPAs, on the other hand, identified inability to identify key issues and lack of investigative intuitiveness as the most common reasons for a forensic accountant’s ineffectiveness.

As a testifying expert, I have found that demonstrating effective oral communication skills includes having the ability to teach in the courtroom. For example, the forensic accountant must have a knack for taking very complex financial data and explaining it to those listening – judge or jury, in a manner that they easily understand. If the testifying forensic accountant notices a jury member or two starting to doze off while they are speaking, this may not be a good sign that they are getting their message across.


[1] Practice Aid 10-1, Serving as an Expert Witness or Consultant; American Institute of Certified Public Accountants, Inc., 2010

[2] White paper: Characteristics and Skills of the Forensic Accountant; authors: Charles Davis, Ramona Farrell and Suzanne Ogilby; published by the AICPA FVS Section

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Depositing Checks Remotely – The Banks are on Top of this, Right?

Posted on July 28 2015 by admin

Ah, the convenience of depositing a check right from my phone. How much easier could it get? Log onto my account, choose remote deposit, snap a picture of the front and back of the check and ABRACADABRA my check is deposited. No getting out to the bank or finding a deposit slip. Once I receive notification from my bank that the deposit has been accepted, I will typically write a note on the check indicating when and how I deposited it. Because frankly, I can’t remember what I had for breakfast this morning let alone whether or not a particular check has been deposited.

And apparently others can’t remember either. Individuals are finding that checks they have written for services are being cashed more than once. This is generally an honest mistake. The younger generations don’t typically balance their checkbooks as so many of us have been taught to do. And rather than combing through statements online, when they find a check that they can’t remember if they deposited or not, they just deposit it. This is known as double presentment. An area that some predict is ripe for fraud.

The banks are doing a pretty good job at catching most double presentments. But some smaller amounts have slipped through the cracks. And, if the check is presented via different channels (mobile deposit, ATM deposit, teller deposit) or at different institutions, it gets more difficult to catch a double presentment.

Be kind to those from whom you accept checks. If you deposit remotely, once you have confirmation from your bank that the deposit has been accepted, write on the check or simply destroy it. Don’t just throw it away for someone to find in the trash. And keep an eye on your own bank account if you still write checks.

Let’s stop the fraudsters before they can get started.

By Melissa E. Loughlin-Sines, CPA, CVA, CFE, CFF

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Mitigation – A Key Issue in the Assessment of Damages

Posted on July 21 2015 by admin

A damages award must consider steps the plaintiff took, or reasonably could have taken, to mitigate the alleged losses. The defendant has the burden to prove that losses could have been avoided by reasonable efforts of the plaintiff without causing undo expense or risk.

Duty to Mitigate

One of the principles limiting recovery of damages is a plaintiff’s duty to mitigate, that is, avoid or minimize damages. This requires that a plaintiff take appropriate actions to overcome the damages allegedly caused by the defendant. This principle is summarized in the Restatement (Second) of Contracts: (*)


(1) Except as stated in Subsection (2), damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation.

(2) The injured party is not precluded from recovery by the rule stated in Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss.

The duty to mitigate applies in virtually every type of litigation. For example:

  • In a breach-of-contract case, a plaintiff should make reasonable efforts to replace lost business.
  • A manufacturer that suffers a business interruption should minimize the impact by resuming operations at a temporary location or outsourcing production if possible.
  • An antitrust plaintiff prevented from entering a particular market should explore opportunities to invest in alternative markets.
  • A wrongfully terminated employee should make reasonable efforts to find other employment.

Burden of Proof

A Plaintiff’s failure to mitigate is an affirmative defense – that is, the defendant, as the party responsible for any losses, has the burden to prove that such losses have been, or could have been, reduced or avoided through mitigation. It is important that a damages expert understand what steps, if any, were taken by the plaintiff to mitigate its losses so the financial impact can be measured.

Evaluating Mitigation Opportunities

Evaluating mitigation opportunities can be every bit as challenging as measuring alleged losses. This is particularly true when the plaintiff purportedly failed to fulfill its duty to mitigate.

Estimating the impact of mitigation alternatives requires considerable professional judgment by the damages expert. Both the plaintiff’s business and industry must be understood to determine whether a mitigation opportunity is reasonable. And if so, the expert must estimate its impact on alleged losses.

The expert must also consider whether income earned subsequent to the wrongful act is the result of mitigation efforts, or is income that would have been earned in addition to the alleged losses in the ordinary course. It should be noted that a plaintiff is entitled to recover any expenses incurred in its effort to mitigate – even if unsuccessful.

Damages Assessment

The plaintiff’s duty to mitigate is an important issue that can have a significant impact on a damages award. It is, therefore, important for attorneys on both sides, along with their financial experts, to address this issue early in the litigation process.

By Lynne Bouvea, CPA/ABV/CFF, ASA, CFE

(*) Published by the American Law Institute, the Restatement of the Law is a set of treatises on legal subjects that seek to inform judges and lawyers about general principles of common law, and is one of the most respected and well-used sources of secondary authority.

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U.S. Supreme Court Rules that Second Mortgages Cannot be Stripped in a Personal Bankruptcy

Posted on July 14 2015 by admin

In early June 2015, the U.S. Supreme Court ruled that homeowners who have an “underwater” second mortgage on their home – one with a mortgage balance that exceeds its current value –cannot be stripped off or dismissed in a Chapter 7 bankruptcy proceeding.

This recent court decision is going to dramatically impact homeowners who are struggling in this economy and are considering filing for Chapter 7 bankruptcy protection. In order for the homeowners to retain ownership of their home, they will have to assume the debt on not only the first mortgage but the second mortgage as well, even if the current value of the home is less than the amount owed on just the first mortgage. This ruling is going to make it more difficult for homeowners to emerge from bankruptcy protection and retain ownership of their home since this additional debt will impact their personal budgets.

The Supreme Court unanimously voted against two homeowners in Florida, where the two homeowners had both won before the local appeals court where it had ruled that homeowners in Chapter 7 bankruptcy can have a second mortgage dismissed (also known in bankruptcy terms as “stripped off”) even when the debt that is owed on just the first mortgage is more than the current value of the house. But Bank of America, which was the second mortgage holder in both cases, challenged the appellate court’s decision and won. The Supreme Court not only reaffirmed, but extended its controversial decision in prior cases which the Court had held that a Chapter 7 debtor cannot “strip down” a partially underwater mortgage.

One of the peculiar consequences of this ruling is that if the homeowner cannot afford both mortgages, the bankrupt homeowner will simply have to allow the first lienholder to foreclose on the home which will cause the second mortgage to be wiped out completely anyway.

By Ted Burr, CTP, CIRA

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A New Tax-Free Vehicle for the Disabled

Posted on July 7 2015 by admin

The Achieving a Better Life Experience Act (“ABLE Act”) offers a new tax-free savings vehicle for disabled individuals to pay for expenses not covered by government programs such as health care, employment training and support, housing, transportation and education. The ABLE Act was passed by Congress and signed by President Obama in December 2014 as part of The Tax Increase Prevention Act of 2014, adding Section 529A to the Internal Revenue Code (IRC). The intent is to supplement, not supplant, benefits otherwise available to those individuals, whether through private sources, employment, public programs or otherwise.

On June 22, 2015, the Internal Revenue Service issued proposed regulations under Section 529A of the IRC which provide guidance on the requirements a program must satisfy in order to be a qualified ABLE program described in Section 529A. Section 529A allows the creation of a qualified ABLE program by a State (or agency or instrumentality thereof) under which a separate ABLE account may be established for a disabled individual who is the designated beneficiary and owner of that account.

Section 529A(e)(1) provides that an individual is eligible for an ABLE account if either: 1) the individual is entitled to benefits based on blindness or disability under Title II or XVI of the Social Security Act and the blindness or disability occurred before the age of 26, or 2) a disability certification satisfying special requirements is filed with the Secretary.

Below are some of the criteria associated with ABLE Act, Section 529A, and the proposed regulations:

  • Account contribution limit is currently $14,000 per year (tied to the gift tax exclusion amount)
  • Contributions must be made in cash
  • Contributions can be made by any person – includes an individual, trust, estate, partnership, association, company or corporation
  • Contribution may be made by the designated beneficiary however this would not qualify as a gift for tax purposes
  • Only one ABLE account per beneficiary
  • Residency requirement – must open ABLE account in state where owner resides
  • Total contribution limit over lifetime is tied to state’s 529 maximum. In Arizona the limit is currently $412,000.
  • If ABLE account balance exceeds $100,000, Supplemental Security Income (SSI) benefits will be suspended
  • If distributions do not exceed the designated beneficiary’s qualified disability expenses, no amount is includible in the designated beneficiary’s gross income
  • Upon the death of the designated beneficiary, all amounts remaining in the ABLE account are includible in the designated beneficiary’s gross estate for purposes of the estate tax. However, the State may file a claim for the amount of the total medical assistance paid for the designated beneficiary under the State’s Medicaid Plan after establishment of the ABLE account.

The regulations are proposed to be effective as of the date of the publication of the Treasury decision adopting these rules as final regulations in the Federal Register. These rules, when adopted as final regulations, will apply to taxable years beginning after December 31, 2014. Until the issuance of final regulations, taxpayers and qualified ABLE programs may rely on these proposed regulations.

The Treasury Department and the IRS request comments to be posted at and have scheduled a public hearing for October 14, 2015. To read more about the ABLE Act and proposed regulations, click here.

By Cindy Andresen, ASA


Federal Register: Guidance Under Section 529A: Qualified ABLE Programs – A Proposed Rule by the Internal Revenue Service on June 22, 2015.

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Could New Section 2704 Regulations Eliminate Discounts Applicable to Transferred Interests in Family Owned Entities?

Posted on June 30 2015 by admin

Section 2704(b)

Internal Revenue Code Section 2704(b) provides that certain “applicable restrictions” that would typically justify the application of lack of control and/or lack of marketability discounts to transferred interests in closely-held family entities such as limited partnerships or limited liability companies are to be ignored for the purpose of valuation, if those interests are transferred either by gift or upon death to or for the benefit of other family members.

Applicable Restrictions

An applicable restriction is one that restricts the ability of an entity to liquidate with terms that are more restrictive than under applicable default state law and that either disappears after the transfer to a family member or when the family collectively is vested with the authority to eliminate it.

To preclude a restriction from being applicable, statutes have been changed to ensure that the default rules under state law restrict the ability of the entity to liquidate.

Statutory Proposal and Regulations

There has been a proposal to amend Section 2704 to create an additional category of restrictions that would be disregarded when valuing an interest in a family controlled entity. It would apply to a transfer of an interest to a family member, if after the transfer the restriction will lapse or may be removed by the transferor or the transferor’s family. These disregarded restrictions would essentially include limitations on a holder’s right to liquidate its interest, which are more restrictive than a specified standard to be identified in the regulations.

Status of Proposed Amendment to Section 2704

On May 10, 2015 Cathy Hughes of the U.S. Treasury’s Office of Tax Policy spoke at the ABA’s Tax Section Meeting. She commented on proposed Section 2704 regulation which might have a dramatic impact on the valuation of interests in closely-held limited partnerships and limited liability companies transferred to family members.

Ms. Hughes suggested that the 2704 regulations might be issued later this summer or fall prior to the ABA Tax Section meeting which is September 17-19.

Treasury regulations are typically effective on the date final regulations are issued. At least several years typically lapse from the time proposed regulations are issued until the regulations are finalized. In very limited situations, proposed regulations provide they will be effective when finalized retroactive back to the date of the proposed regulations.

Possible Responses to the Proposed Amendment

Many practitioners believe that if enacted, an amendment to Section 2704 would ultimately be rejected by the Tax Court in a manner analogous to Kerr v. Commissioner in 1999. In that case, as well as Jones v. Commissioner, Knight v. Commissioner, and Harper v. Commissioner, the IRS argued that the term “applicable restriction” in Code § 2704(b) includes any restriction that limits the ability of a partner/member to liquidate his interest in the partnership/LLC that is more restrictive than state law. In support of its argument, the IRS cited Regulation § 25.2704-2(b), which provides that an “applicable restriction” includes any restriction to liquidate the entity “in whole or in part”. In all four cases, the Tax Court rejected the IRS’s argument.

Another important consideration is whether the elimination of lack of control and lack of marketability discounts will ultimately squash the Treasury’s plan to amend Section 2704 because the instructions to Form 706 (United States Estate Tax Return) and Form 709 (United States Gift Tax Return) instruct the preparer to determine the fair market value of the decedent’s assets or the gifted assets.

Since fair market value is defined as the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, it is our opinion that the business valuator must take lack of control and lack of marketability discounts into consideration unless the instructions to the forms are revised.

By Gary Ringel, CGREA

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Divorce Business Valuations: The “Double Dip” and Reasonable Compensation Conundrums

Posted on June 17 2015 by admin

DFamily Law Court magistrates often face two dilemmas regarding what monthly spousal maintenance payments should be when a business is owned by the divorcing couple and is an asset to be distributed in the property settlement part of the divorce.

For purposes of discussion, let us assume that the spouse who runs the couple’s business is Husband and that he will pay Wife for her 50% equity interest and he will continue to operate the business as his own; and, that Wife does not work in the business. Let us also assume that the only compensation going to the marital community is the compensation Husband earns out of the family business.

The dilemmas faced by the judge are these: 1. If Wife gets her 50% interest in the business bought out by Husband, should she also get spousal maintenance payments; and, 2. if Wife gets paid for her 50% business interest by Husband, should the amount of Husband’s compensation used to calculate the spousal maintenance payments be the same compensation deemed as a reasonable expense in valuing the business under an income approach?

Dilemma 1

Dilemma 1 is frequently protested in divorce by Husband who has to purchase Wife’s 50% business interest and also has to make monthly spousal maintenance payments. Husband will often cry “foul” and contend that this is a case of “double dipping”. That is, Wife already receives her interest in all future compensation of Husband because it is already contemplated in the business valuation. Some business appraisal experts do not agree with this thought process. The reason is this: The value of the business is the value of a marital asset, usually done at some date near the date of service of notice of divorce. This is no different than determining the value of a home, a marital asset which is also to be considered for property settlement purposes.

The value of the business is calculated on the amount of earnings or cash flows remaining after reasonable compensation has been deducted. It is this remainder or “excess,” generally after an estimate for income taxes has been removed, that will be valued in arriving at the portion of the value of the business asset to be distributed to Wife. There is, therefore, no double dip involved if spousal maintenance is to be paid by Husband. On the other hand, if no compensation expense is considered by the business appraiser in arriving at a value for the business, some appraisers then believe double dipping is occurring; that is, that the same compensation is being, in effect, considered twice: 1. by its exclusion in the valuation of the business thus overvaluing Wife’s interest; and 2. by it also being used in the spousal maintenance calculations.
Dilemma 2

Dilemma 2 may also bring opposition by Husband, who operates the couple’s business, and who also has to pay spousal maintenance. Husband, however, may find himself in his own dilemma. For example, in the valuation of an interest in a professional practice, say a medical one, reasonable compensation may be researched by the business appraiser to be $400,000, when the Husband/Doctor actually averages about $700,000 annually, and has done so for the last five years and likely will, for the next five. Husband will argue that his compensation for spousal maintenance purposes should be based on the $400,000 number and not the $700,000 amount.

One school of thought by business appraisal experts is that using the $400,000 as the benchmark for basing future spousal maintenance payments would be a mistake. The reason is this: The $400,000 is used for business valuation purposes as reasonable compensation to be paid to Husband/Doctor solely to arrive at a value under the standard of fair market value (*) . It is what the “market” at large would consider as reasonable compensation. Another way of thinking about this is to imagine what an absentee owner would pay to a physician to take the place of Husband to be involved in the practice: $700,000, or the market rate of $400,000 annually. If spousal maintenance is based on only the $400,000 amount, Wife will be losing out on an average of $300,000 per year on which her spousal maintenance payments would also be based.

Another school of thought is that only the $400,000 amount should be used for determining spousal maintenance in order to avoid, or lessen the effect of, the “double-dip” scenario mentioned previously.

Concluding Thought

If you are thinking these dilemmas have to be something that gives judges gray hair in trying to determine what is equitable to the divorcing spouses, my impression is that you are… absolutely right!

Writer’s note: The foregoing comments are reflective of issues involving divorce cases occurring in Maricopa County, Arizona and may not be what happens in divorce matters in other jurisdictions. Other states, for example, may treat these two dilemmas entirely different than what has been depicted in this article.

By Don R. Bays CPA, ABV, CVA, CFF

(*) Fair Market Value is defined in the Statement on Standards for Valuation Services, No. 1, of the American Institute of CPAs as: (T)he price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm’s length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.

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Did You Just Try to Scam a Forensic Accountant?

Posted on June 9 2015 by admin

As a forensic accountant, I know that telephone scams are becoming increasingly more common. However, I was surprised when I actually received a phone call recently with an automated message stating that I needed to call back regarding a serious tax liability. Although I knew it was bogus, I called back and spoke to a gentleman with a foreign accent, purporting to be an IRS representative, who claimed that I owed back taxes which needed to be taken care of immediately. When I explained to the caller that I am a CPA and that I know that the caller was committing fraud, he hung up immediately.

This particular scam is typically prevalent around tax filing deadlines, and I did receive the call just prior to April 15th. Last year, the U.S. Treasury Inspector General for Taxpayer Administration (TIGTA) issued a warning to taxpayers to be alert for phone calls from cybercriminals, purporting to be from the IRS, claiming that the taxpayer owes taxes and must pay immediately with a prepaid debit card or wire transfer. In January 2015, the TIGTA issued a press release reminding taxpayers to be wary and stated that “This scam, which is international in nature, has proven to be the largest scam of its kind that we have ever seen. The callers are aggressive, they are relentless and they are ruthless. Once they have your attention, they will say anything to con you out of your hard-earned cash.” (*)

TIGTA has received reports of roughly 290,000 contacts since October 2013 and has become aware of nearly 3,000 victims who have collectively paid over $14 million as a result of the scam. The fraudsters may threaten the victim with arrest, deportation, loss of business or driver’s license.

How to know the call is bogus? The TIGTA explains that the IRS usually contacts people by mail first, rather than by phone regarding unpaid taxes. In addition, the IRS would never ask for payment using a pre-paid debt card or wire transfer or ask for a credit card number over the phone. Furthermore, the IRS would never use email, texting or any social media to contact a taxpayer. Finally, an IRS representative would not use threatening language.

According to the TIGTA, these phone fraudsters often:

  • Utilize an automated robocall machine.
  • Use common names and fake IRS badge numbers.
  • May know the last four digits of the victim’s Social Security Number.
  • Make caller ID information appear as if the IRS is calling.
  • Send bogus IRS e-mails to support their scam.
  • Call a second or third time claiming to be the police or department of motor vehicles, and the caller ID again supports their claim.

The TIGTA offers advice if you receive a phone call like mine:

  • If you owe Federal taxes, or think you might owe taxes, hang up and call the IRS at 800-829-1040. IRS workers can help you with your payment questions.
  • If you don’t owe taxes, fill out the “IRS Impersonation scam” form on TIGTA’s website, or call TIGTA at 800-366-4484.
  • You can also file a complaint with the Federal Trade Commission at Add “IRS Telephone Scam” to the comments in your complaint.

By Julia Allen Miessner, CPA, CFF, CGMA


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Shareholder Debt or Equity – Does it Effect Value?

Posted on June 2 2015 by admin

Shareholders of a small business sometimes will infuse cash into their Companies when needed. This cash is often recorded as a loan to the business. The shareholder and the Company may or may not have documented the “loan” setting forth the terms including interest rate, payback period, etc.

When developing an equity value of a business, an appraiser will subtract interest bearing debt from the value determined using an income approach when a weighted average cost of capital has been used. Interest bearing debt is also subtracted from the value determined under a market approach. The use of an asset approach calls for all liabilities to be subtracted from total assets.

Below are basic examples of the effect on value determined by the treatment of cash infusions by the shareholder(s). In the top example, $200,000 has been treated as debt. In the bottom example, the $200,000 has been treated as equity (additional paid in capital).


Now, imagine this on a much larger scale. In a case in Illinois Family Court (*) , a husband and wife argued over the treatment of $5.8 million contributed by the family trust to their business. The Wife’s business valuation expert treated the $5.8 million as additional paid in capital while the Husband’s expert treated it as interest bearing debt. The valuations of the business did vary substantially prior to the treatment of debt. Wife’s expert concluded a value of $16.1 million less debt of $4.9 million for an equity value of $11.2 million. Husband’s expert determined a value of under $10 million less debt of $9.5 million concluding an equity value of $310,000.

The Illinois Court, without explanation, determined a value of $10.6 million, less debt. Per the court, there was “clear, convincing, and overwhelming evidence that these were business loans.” The court therefore subtracted $9.5 million of debt to arrive at a value of $1.1 million for the business.

While it is not clear to what evidence the court was referring to with regards to the existence of the loans, it would seem that promissory notes with stated interest rates and terms of payback as well as proof of payments to the trust pursuant to the promissory notes would be considered convincing evidence.

By Melissa E. Loughlin-Sines, CPA, CFE, CVA, CFF, ABV

(*) Freihage v. Freihage, State of Illinois Family Court

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