Charting the Course of the Build Back Better Bill

By this Thanksgiving, Congress hopes to pass two of the largest bills in American history, the $1.2 trillion infrastructure bill (which was signed into law by President Biden on November 15th) along with a $1.75 trillion Build Back Better bill. While the infrastructure bill made it through Congress with minimal tax hikes, the passing of the larger reconciliation bill may still create sweeping changes to American tax policy, specific to high-net-worth individuals. This article summarizes what is in the Build Back Better bill and what it might mean for taxpayers.

A “Grievous” Valuation Error: Tax Court Protects Boundaries of Fair Market Value in Grieve Decision

All fair market determinations involve assumptions regarding how buyers and sellers would behave in a transaction involving the subject asset. In a recent Tax Court case, the IRS appraiser applied a novel valuation rationale predicated on transactions that would occur involving assets other than the subject interests being valued. In its ruling, the Court concluded that this approach transgressed the boundaries of what may be assumed in a valuation.

EBITDA Single-Period Income Capitalization for Business Valuation

The article, presented as a pdf download, suggests a technique based on the adjusted capital asset pricing model whereby business appraisers and market participants can independently develop EBITDA multiples under the income approach to valuation. discusses what the adoption of these proposed regulations might mean from a valuation standpoint.

Noncompete Agreements for Section 280G Compliance

Golden parachute payments have long been a controversial topic. These payments, typically occurring when a public company undergoes a change-in-control, can result in huge windfalls for senior executives and in some cases draw the ire of political activists and shareholder advisory groups. Golden parachute payments can also lead to significant tax consequences for both the company and the individual. Strategies to mitigate these tax risks include careful design of compensation agreements and consideration of noncompete agreements to reduce the likelihood of additional excise taxes.

Richmond v. Commissioner

In this article, we discuss the case of Richmond v. Commissioner in which the valuation of the Estate of Helen Richmond was questioned.

Koons v. Commissioner

It appears that Mr. Koons’ careful estate planning, involving a significant sale and redemption transaction of business operations to provide liquidity and flexibility in his later years, was disrupted by an untimely death. While estate planning professionals can hardly advise against a premature passing, the disruption here highlights the importance of starting early with business valuation input to help avoid a complex confluence of strategic transactions within a narrow time frame.

Valuation Strategies for Dealing with the IRS

Business owners seldom think about a valuation strategy for dealing with the IRS on gift and estate tax matters. Many owners ignore the importance of estate tax planning, which can also be called lifetime planning. Lack of vision or short-sightedness on planning can be damaging to family wealth and succession.

8 More Mistakes To Avoid in Valuations: According to Tax Court Decisions

In this second part of a two-part series, we have collected eight examples of mistakes that valuation experts have made, as reported in federal courts tax decisions. It is important to note that there are two sides to every story, and courts do not always get it right. For this reason, we do not name any valuators in this collection of mistakes to avoid.

16 Mistakes to Avoid in Valuations: According to Tax Court Decisions

In this article we have collected 16 examples of mistakes made by valuation experts, as reported in federal courts in tax decisions. It is important to note that there are two sides to every story, and courts do not always get it right. For this reason, we do not name any valuators in this collection of mistakes to avoid.

Janda v. Commissioner: The QMDM Appears in Tax Court Again

The Tax Court Memorandum demonstrated that the Court thoroughly studied and it appears well understood the QMDM. While the Court did not accept the expert’s 65.77% discount, the Court criticized the assumptions used, not the QMDM.

Fair Market Value vs. The Real World

The world of fair market value is not the real world. It is a special world in which the participants are expected (defined) to act in specific and predictable ways.

Is It Reasonable? Normalizing Adjustments

As part of the appraisal due diligence process, information is obtained from general partners and/or managing members as well as from a variety of other sources. Such information provides a basis for the appraiser to understand the composition, operations, strategy, and governance of the entity. This article focuses on the importance of analyzing, from a valuation perspective, the reasonableness of this information.