Demystifying Valuation, Economic Damages + Forensic Accounting

Step Transaction Doctrine

A recent case in the federal district court highlights the need to have some time elapse between the date of formation and funding of an FLP or FLLC and the date of gifting of interests in the FLP/FLLC. In Heckerman v U.S., the taxpayers (David and Susan Heckerman) took the following steps in gifting of …

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Ponzi is Not the Dude on Happy Days – Fraud in the Marketplace

A few years ago I was asked to be an expert witness on a federal court case involving several management members of an investment firm, which I will call Big Scheme (“BS” for short). BS was selling interests in foreign mortgage products. At least that’s what BS was marketing to unsuspecting investors in the U.S. …

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Family Limited Partnership Failures

We see a lot of tax cases about family limited partnerships (FLPs) and family limited liability companies (FLLCs) that have bad facts that ultimately lead to the loss of any valuation adjustments for estate and gift tax purposes (e.g., discounts for lack of control or lack of marketability). Some of the more common “bad facts” …

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Key Person

We often think of key people with admiration. If it weren’t for them, your business certainly wouldn’t be what it is today. First, what is a key person? A key person is someone, who if they resigned, died, or became disabled, could not be readily replaced and the loss would negatively affect your business. While many …

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Fraud in the Workplace – A Novel Use of Bank Statements

Cora was a very bright accountant. She was also very creative at her job – especially when it came to stealing money from her company. Cora was the Controller for a commercial property management company, known as Promanco (well, actually, that’s not the company’s real name, but we’ll use it to protect the privacy of …

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Buy-Sell Agreement: Part II

Value is addressed in the Buy-Sell agreement. It can be a fixed price, a formula to determine value, or a process to determine value. A fixed price is perhaps the easiest to understand and the most at risk of rewarding one party at the expense of another. It may be a reasonable measure of value …

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Buy-Sell Agreement: Part I

Buy-Sell agreements can be an important part of your business, and should be well thought out. They can have legal, tax and valuation ramifications, so you should consult experts in each of these fields when drafting or modifying a Buy-Sell agreement. Buy-Sell agreements can be used for several purposes. The agreement can provide a market …

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