Demystifying Valuation, Economic Damages + Forensic Accounting

Valuation Discounts for Gift of Single-Member LLC Interests

In a split decision by the U.S. Tax Court (Suzanne J. Pierre v. Comm., 133 T.C. No. 2), the court dealt with the issue as to whether a single-member LLC is to be disregarded for transfer tax purposes (i.e., gift tax purposes), thus treating the gift as a direct gift of the underlying property of …

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Respecting Staff in the Workplace

  In the early 1980’s I had just become a partner in a 90-person Phoenix CPA firm.  I thought I had a pretty good idea of how to treat staff working for me – that is, from all the stuff I’d been taught in the management training courses I’d gone to, and from my own experiences …

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Thinking About A Leveraged ESOP Transaction? Part II

With proper planning and execution, a leveraged ESOP can provide benefits to all parties of the transaction, including the company, the owners, the employees and lenders. The Company The most significant benefit for the company is the tax deduction for the contributions to the ESOP, which are essentially returned to the company and available to …

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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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