In 2013, Florida’s legislature rejected the long-standing Frye standard on the admissibility of expert witness testimony and adopted the Daubert standard and Federal Rule of Evidence 702 with two amendments to the state’s Evidence Code. Subsequently, The Florida Bar’s Code and Rules of Evidence Committee challenged the legislative changes with the state Supreme Court. Arguing  Continue Reading »

Holder v. Howe, 2016 Cal. App. Unpub. LEXIS 8989 (Dec. 14, 2016) A bankruptcy-related suit in front of the California Court of Appeal turned on the issue of how to value an aged film that never made any money. The trial court dismissed the plaintiff expert’s approach as “illogical.” The appeals court agreed the method  Continue Reading »

Transupport, Inc. v. Commissioner, 2016 Tax Ct. Memo LEXIS 214 (Nov. 23, 2016) Expert independence was front and center as an issue in the Exelon tax case. Now comes, a reasonable compensation case in which the Tax Court zeroed in on the same point. The court rebuked an experienced compensation analyst for what it perceived  Continue Reading »

When individual taxpayers claim deductions for bad debt losses, the IRS is always skeptical. Why? Losses from purported loan transactions often fail to meet the tax-law requirements for bad debt loss deductions. For example, a taxpayer might try to write off a capital contribution to a business entity that underperformed. Or a taxpayer might have  Continue Reading »

In re OM Group, Inc. Stockholders Litig., 2016 Del. Ch. LEXIS 155 (Oct. 12, 2016.) Shareholders protesting what they considered a rushed sale at a bargain basement price suffered defeat in the Delaware Court of Chancery when the court ruled strong shareholder approval of the proposed merger had taken care of any problematic conduct on  Continue Reading »

In re Books a Million Stockholders Litig., 2016 Del. Ch. LEXIS 154 (Oct. 10, 2016) The Delaware Court of Chancery dismissed a minority shareholder challenge to a going-private merger, concluding the defendant directors did not act in bad faith when they favored the controlling shareholders’ bid over a third-party buyer’s higher offer. The dispute arose  Continue Reading »

What happens if you’re the owner of a limited liability company (LLC) that generates tax losses, and you don’t spend a lot of time in the activities of the business? The losses might be classified as passive, and your ability to currently deduct them might be severely restricted by the passive activity loss (PAL) rules.  Continue Reading »

Select Comfort Corp. v. Tempur Sealy Int’l, Inc.  An economic damages case featuring two major mattress manufacturers and claims of false advertising provides an insightful discussion of two theories of damages: disgorgement and lost profits. The court rejected one of the plaintiff expert’s two disgorgement models as not sufficiently tailored to the alleged wrongdoing and  Continue Reading »

In re Marriage of Cheng, 2016 Wash. App LEXIS 2854 (Nov. 22, 2016) A double-dip decision out of Washington State prompted a reader’s request for comment from veteran valuator Jim Alerding (Alerding Consulting), who frequently deals with divorce-related valuation issues. In In re Marriage of Cheng, the trial court determined that the nonbusiness owner spouse  Continue Reading »

Sherwood Invs. Overseas Ltd. v. Royal Bank of Scot. N.V. (In re Sherwood Invs. Overseas Ltd., Inc, 2016 U.S. Dist. LEXIS 136096 (Sept. 30, 2016) A bankruptcy proceeding makes clear that, if an expert hopes to support a client’s position, he or she has to know more than the mechanics of calculating losses. The analysis  Continue Reading »