Category Archives: Court Rulings

Case Collapses When Experts Apply Wrong Measure of Damages

October 20, 2017 | Court Rulings, Valuations

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 »

Chancery Bases Fair Value Calculation on Income-Based Model

October 6, 2017 | Court Rulings, Valuations

Dunmire v. Farmers & Merchants Bancorp of W. Pa., 2016 Del. Ch. LEXIS 167 (Nov. 10, 2016) In a statutory appraisal action, the Delaware Court of Chancery rejected the deal price as evidence of fair value, citing a suboptimal sales process. Only an income-based approach that the experts for both parties used represented a reliable  Continue Reading »

Compromised Asset Appraisals Undo Like-Kind Tax Plan

September 22, 2017 | Court Rulings, IRS Regulation, Tax Planning, Tax Preparation, Valuations

Exelon Corp. v. Commissioner, 2016 U.S. Tax Ct. LEXIS 26 (Sept. 19, 2016) A Section 1031 case that Judge Laro adjudicated cautions experts about allowing the hiring attorney to assume control over the appraisal. In ruling for the government, the judge found the taxpayer’s legal counsel had “interfered with the integrity and the independence of  Continue Reading »

Inadequate Records Lead to Unfavorable Results for Taxpayers

September 18, 2017 | Court Rulings, IRS Regulation, Tax Planning, Tax Preparation

Although the Federal tax law allows deductions for many items, such as legitimate business expenses and charitable donations, you must maintain adequate records to support them. If your tax return is audited, missing or incomplete records could lead to additional taxes, interest and penalties, as these three recent U.S. Tax Court cases demonstrate. 1. Alan Brookes, et  Continue Reading »

Court of Appeals Sides With Taxpayers on Right to Vet IRS Expert Valuation

September 8, 2017 | Business Plans, Court Rulings, IRS Regulation, Valuations

Cavallaro v. Commissioner, 2016 U.S. App. LEXIS 20713 (Nov. 18, 2016) (Cavallaro II) In 2014, taxpayers who had relied on estate planning professionals to affect the transfer of their family business to their sons confronted a tax liability on a $29.6 million gift. A decision from the appeals court, however, offers them a glimmer of  Continue Reading »

Is Your Expert Skirting the Standards?

August 28, 2017 | Court Rulings, Valuations

In 1993, the Supreme Court positioned judges as “gatekeepers” against “junk science” in Daubert v. Merrell Pharmaceutical, Inc. (509 U.S, 579). Then, in 1999, Kumho Tire Company v. Carmichael (526 U.S. 137) extended the scope of Daubert beyond scientific testimony to other academic disciplines, including finance and appraisal, accounting, statistics, and economics. Daubert hearings are  Continue Reading »

Debtors’ Balance Sheet Not Reliable Indicator of Assets’ Market Value

August 25, 2017 | Court Rulings, Valuations

In re Sunedison, Inc., 2016 Bankr. LEXIS 2959 (Aug. 11, 2016). When a company declares bankruptcy, investors often question the accuracy of post-petition valuations offered by other stakeholders. But, as a recent ruling in a major bankruptcy case shows, investors rarely succeed in convincing the court to appoint an equity committee to ensure their interests  Continue Reading »

Spouse’s Unilateral Stock Agreement Sets Value in Divorce Action

August 11, 2017 | Court Rulings, Divorce Litigation, Valuations

Baumbouree v. Baumbouree, 2016 La. App. LEXIS 1388 (July 13, 2016). In a Louisiana divorce case, the trial court applied the value stated in a stock agreement the physician owner-spouse had entered into with his firm in the context of partition. In her appeal, the wife objected that by doing so the trial court had  Continue Reading »

5 Recent Supreme Court Decisions that Could Affect Your Business

July 31, 2017 | Court Rulings, IRS Regulation

The U.S. Supreme Court adjourned for its summer recess at the end of June. Here are five recent cases from its 2016 term that may be of interest to business owners and managers. 1. Advocate Health Care Network v. Stapleton (S. Ct. No. 16-74, June 5, 2017) Generally, employees are protected from unexpected losses in their retirement  Continue Reading »

Tax Court Corrects Prior Valuation of LP Interest to Startling Result

July 28, 2017 | Court Rulings, Valuations

Estate of Giustina v. Commissioner, 2016 Tax Ct. Memo LEXIS 113 (June 13, 2016) (Giustina III) In an estate tax dispute that has lasted for over five years, the Tax Court revalued the decedent’s minority interest in an Oregon family business by order of the 9th Circuit Court of Appeals. The recalculation proved a boon  Continue Reading »