Category Archives: Court Rulings

Federal Circuit Discusses Rationale Behind Different Measures of Damages

February 9, 2018 | Court Rulings, Valuations

Danmark v. CMI USA, Inc., 2016 U.S. App. LEXIS 21672 (Dec. 6, 2016) In a reasonable royalty analysis, how much emphasis may an expert place on the patent holder’s profit margin before the analysis becomes a lost profits calculation in disguise? In answering this question, the Federal Circuit explained the different thinking behind the pursuit  Continue Reading »

Florida Supreme Court Nixes Daubert Amendment

January 26, 2018 | Court Rulings, Valuations

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 »

Market Data Approach ‘Particular Unsuitable’ to Valuing Feature Film

January 12, 2018 | Court Rulings, Valuations

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 »

Reasonable Compensation Analysis Ignores Objective Evidence, Tax Court Says

December 29, 2017 | Court Rulings, IRS Regulation, Valuations

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 »

Bad Debt Losses: Can You Deduct Loans Gone Bad?

December 22, 2017 | Business Plans, Court Rulings, Debt & Financing, Financial Planning, IRS Regulation, Tax Planning, Tax Preparation

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 »

Shareholder Approval ‘Cleanses’ Potential Undervaluation

December 15, 2017 | Court Rulings, Valuations

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 »

Chancery Says Control Premiums Are Real and Legitimate

December 8, 2017 | Business Plans, Court Rulings, Valuations

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 »

Court Decisions Make it Easier to Deduct LLC Losses

November 27, 2017 | Business Plans, Court Rulings, Tax Planning, Tax Preparation

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 »

Court Disapproves of Use of Damages Model to Establish Liability

November 17, 2017 | Court Rulings, Valuations

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 »

Alerding Comments on Washington State Double-Dip Analysis

November 3, 2017 | Court Rulings, Valuations

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 »