Is the value of your business about to increase 12.5%?

Recent discussions by the new administration regarding changing corporate and individual tax rates got me thinking about how different income tax rates can affect the value of a company. For example, I ran some numbers with the following assumptions. The current effective tax rate on a pass-through company’s earnings at the individual level is 38 …

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Hypothetical buyers and imaginary scenarios

Giustina (*) case dealt with the value of an approximate 41% limited partnership interest in a partnership that held timberland. Giustina Land & Timber Co. Limited Partnership (GLTC) owned more than 47,000 acres of timberland at the time of death of Natale Giustina. GLTC had operated continuously since its formation in 1990. Profits were generated …

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Five Easy Changes to Create Value in Your Small Business

A handful of questions to begin – Are you thinking of selling your small and medium-sized entity (“SME”)? Is your largest asset in your estate your business? Are you the CEO, CFO, general manager and sales force of your SME? Do you fear going on a two week vacation because of the number of phone …

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Taxpayer Victory in Personal Goodwill Case

In August of 2014, the U.S. Tax Court (the Court) made a decision in a case that addresses personal goodwill, the Estate of Adell v. Commissioner, T.C. Memo 2014-155. In this case, the decedent, Franklin Z. Adell, and his son Kevin formed The Word Network (The Word), a 24-hour television station that broadcasts urban religious …

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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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Estate & Gift Tax Valuations: Can the IRS Disregard an Agreed Upon Value for Shares in a Buy-Sell Agreement?

Section 2703 of the Internal Revenue Code enacted in 1990 states that buy-sell agreements are disregarded for valuation purposes, unless the agreement satisfies the following tests. Test One: The Agreement Must Constitute a Bona Fide Business Arrangement The buy-sell agreement (Agreement) cannot be a ploy to transfer shares to members of the family at a …

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Save courtroom time, promote collaboration between CPA experts

When I have to testify regarding my opinion of value regarding the ownership interest in a business, I have found a particular strategy that speeds up my time on the witness stand. The strategy often helps settle not only business valuation differences between appraisers, but those relating to economic damages cases as well – before …

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In Federal Tax Court Your Report Is Your Testimony

The level of detail and the manner of explanation in a valuation report for tax compliance purposes is extremely important as the report serves as the expert’s direct testimony in Federal Tax Court. It’s interesting to observe the important steps that families take to protect their assets – hiring top wealth management teams, tax consultants, …

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Quantifying the Lack of Control Discount

Should business appraisers rely more on implied rates of return when quantifying minority discounts? A thought provoking webinar was sponsored by the American Society of Appraisers (ASA) on March 25, 2014. Presenters Eric W. Nath and Bruce A. Johnson encouraged appraisers to place much more emphasis on factors that would be considered by “real world” …

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Curious About the Real Estate Appraisal Process?

The most common type of real estate appraisal assignment is the formulation of an opinion of market value.  The following information describes each step of the appraisal process. Identification of the Assignment Parameters The appraiser will identify the client, intended users and use as well as the purpose. A crucial element to any appraisal is …

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