Tax Court Differs on Treatment of Built-In Capital Gains

When valuing a controlling or non-controlling interest in a C corporation that owns only marketable securities, a common method to apply is the net asset value method under the asset approach. Under this method, the fair market value of liabilities is subtracted from the fair market value of assets. Included in the liabilities is a …

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Number of AZ real estate appraisers could decrease

The number of Arizona real estate appraisers could decrease at a rate of 3% per year over the next decade. According to the Appraisal Institute, the pool of real estate appraisers in the United States is shrinking and aging. Sixty-two percent of appraisers are 51 and older while 24% are between 36 and 50. Only …

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Can You Apply a Discount to a Promissory Note?

Hoffman v. Commissioner: Tax Court Accepts 12.5% Discount Rate Treasury Regulation 20.2031-4 states that the fair market value of promissory notes, secured or unsecured, is presumed to be the amount of unpaid principal, plus accrued interest at the date of valuation, unless the taxpayer provides sufficient evidence to the Internal Revenue Service which supports a …

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Will Your 2012 Gift Tax Return be Audited by the IRS?

In 2012 taxpayers and their advisers were scratching their heads about the presidential election and its impact on future gift and estate tax exemptions because the $5 million inflation indexed per person federal estate and gift tax exclusion was scheduled to drop to $1 million on January 1, 2013. Consequently, many wealthy matriarchs and patriarchs …

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Qualified Personal Residence Trusts

GIFT YOUR RESIDENCE TO YOUR BENEFICIARIES DURING YOUR LIFETIME, CONTINUE TO RESIDE IN IT AND SAVE TAXES WHAT IS A QPRT? A qualified personal residence trust (QPRT) is a trust typically designed to transfer a primary residence (*) to your beneficiaries during your lifetime which, if you elect, permits you to serve as the trustee. …

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Start Up Companies – Why You Need a Valuation for Stock Options

It seems everyone remembers the Enron accounting scandal. Prior to the company going bankrupt, Enron executives were accelerating payments under their deferred compensation plans in order to cash in before the bankruptcy. Other publicly-traded companies were seemingly abusing the timing of stock option awards by back-dating the option grants. Section 409A was added to the …

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The DOL Comes Down Hard on ESOP Trustee

On June 2, 2014 the U.S. Department of Labor (DOL) reached a $5.25 million settlement with GreatBanc Trust Company (GreatBanc). It was alleged that GreatBanc, as trustee to the Sierra Aluminum Company Employee Stock Ownership Plan (ESOP), allowed the plan to purchase stock from Sierra Aluminum’s co-founders and top executives for more than fair market …

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Accounting for a capital lease: lessee’s perspective

Leasing equipment continues to be an attractive option for many companies compared to buying equipment outright. After going through the decision process of leasing new equipment, do you know how to account for it? The first question you should ask is “What type of lease is it?” Is it a capital lease or an operating lease? There are …

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Discounts in Marital Dissolution Business Valuations – To Discount or Not

After 15 years of marriage, Art and Wanda were getting divorced.  Among all the assets that had to be distributed was the family business, a heating, ventilation and air conditioning repair company.  Husband was the operator of the business.  Wife took care of the kids and managed the household.  Now Husband was faced with having …

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8 Essential Elements of an Exit Strategy for Business Owners: Part I

At some point in time, every business owner will need to transition their business to new owners, which could be a business partner or management buy out, a transfer to family members or an outright sale of the business on the open market.  Regardless of the expected exit strategy, every business and business-owner should probably …

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