Two cases on trapped-in gains tax—with opposite outcomes
In a California divorce case we recently covered, an appeals court disallowed a discount for possible future taxes because the taxes were neither immediate nor specific. But, in Nebraska, the state’s Supreme Court came to the opposite conclusion. Experts for both sides in that case allowed some amount for the potential future liability of tax for trapped-in gains. But the court never mentioned the issue of immediacy and certainty in allowing the estimated present value of potential future taxes on trapped-in gains.
Read some commentary on these two cases in a blog post by BVR’s legal editor, Jim Alerding. He points out that these two cases exemplify the need to know the law in the jurisdiction of your case.
The Nebraska case is Bohac v. Benes Serv. Co., 310 Neb. 722; 2022 Neb. LEXIS 5, and a case analysis and full opinion are available on the BVLaw platform.
How to find hidden assets in divorce
Parties to a divorce may not be totally forthcoming with assets they own, so the valuation expert often has to help ferret them out. One tactic is to ask for “everything,” meaning all documents related to anything that involves the divorcing parties as either beneficiaries or fiduciaries. This includes trusts, estate plans, and wills—including the wills of other individuals (such as the spouses’ parents) in order to see whether the spouse will inherit anything. Be as broad as possible in your request and be aware that you may not always get everything you ask for but you need to ask anyway. Tax returns, particularly trust and estate returns, can provide a wealth of information to valuation experts, but you have to know where to look!
Locating hidden assets is just one of the topics that will be covered at the National Divorce Conference BVR and the American Academy of Matrimonial Lawyers (AAML) will present in Las Vegas, September 18-20. Leading matrimonial attorneys and financial experts will give you critical insights in sessions covering financial, valuation, forensic, and legal issues surrounding this growing area of practice. The conference will be both online and on-site at the Venetian Resort, and will have more than 20 CPE/CLE credits available. Early-bird pricing is currently in effect, and you can register if you click here. We hope to see you at this unique event!
ESOP companies more optimistic about recovering
Valuation experts assessing how a subject company will recover from the pandemic will be interested in a new study. Majority employee-owned companies with employee stock ownership plans (ESOPs) have been more resilient in responding to the pandemic than other companies, suggests the study. And they are much more optimistic about recovering. ESOPs are nearly six times more likely to anticipate their business would return to its previous level of performance than non-ESOPs. The study’s findings are similar to prior findings regarding the performance and behavior of employee-owned companies during the 2008-2010 recession. The study, “Employee-Owned Firms in the COVID-19 Pandemic,” is from Rutgers University and SSRS and is funded by the Employee Ownership Foundation, an affiliate of The ESOP Association.
Agenda set for NYSSCPA BV and litigation services conference May 16
Each year, BVWire attends the annual New York State Society of CPAs’ Business Valuation and Litigation Services Conference, and registration is now open for this year’s event, which will be webcast May 16. This full-day conference will feature many topics including an update on BV-related court cases, tax litigation involving valuation issues, SPAC warrant valuations, debt valuation, control premiums, exit planning, and more (eight CPE credits available). Click the link above to check out the full agenda.
BVRPro adds to its ASA BV Review archive
Subscribers to the BVResearch Pro platform can access issues of Business Valuation Review going back to 1982, and the Fall 2021 issue has just been added to the archive. This publication is the business valuation journal of the American Society of Appraisers. The Fall 2021 issue includes some tributes to Shannon Pratt, the new International Valuation Glossary—Business Valuation, and articles (one that addresses the volatility of financial metrics used in valuing contingent consideration and another that gives some critical commentary on pre-IPO studies). If you are not a subscriber to the BVResearch Pro platform, you can do a stand-alone subscription to the ASA’s Business Valuation Review if you click here.
Global BV News
Reminder: Take a survey on ESG and valuation
The International Valuation Standards Council (IVSC) would like to hear from business valuation providers, users, and investors on the issue of environmental, social, and governance (ESG). While the International Valuation Standards (IVS) implicitly require the consideration of ESG components within valuation, no explicit standards exist. “The IVSC’s ESG Working Group felt that it was important to carry out a survey of investors, firms and valuers to understand where they are on their journey in relation to the quantification of ESG components within their working practices,” says Alexander Aronsohn, IVSC technical standards director (tangible assets). To take the survey, click here.
Preview of the April 2022 issue of Business Valuation Update
Here’s what you’ll see: