Category Archives: Court Rulings

The Limits of a Successful Daubert Challenge

December 30, 2013 | Court Rulings, Valuations

In the wake of the 1993 Daubert case, challenges against expert witnesses in stock valuation cases have found greater success. Still, not all Daubert disputes succeed. One case before the U.S. Court of Federal Claims helped clarify how one party can successfully challenge the qualifications or methodologies of an expert witness. The case involved a dispute over  Continue Reading »

Court Credits Expert’s Cash Flow Analysis in Solvency Determination

December 4, 2013 | Court Rulings

Samson v. Western Capital Partners LLC (In re Blixseth), 2013 Bankr. LEXIS 1001 (March 28, 2013) “The Trustee … continues the fiction that [the debtor], one of the Forbes’ 400 wealthiest Americans in 2007, was insolvent during that very same year” is how the lender tried to defend against the plaintiff trustee’s suit for a  Continue Reading »

Court Discredits Expert’s Use of Going Concern Method for Inactive Business

December 4, 2013 | Court Rulings

O’Rourke v. Burke and Hotchkiss, PLLC, 2013 N.H. Super. LEXIS 4 (March 6, 2013) Citing an authority on the going concern methodology but failing to apply the prescribed principles was only one of several critical errors an expert made when he assessed damages for a struggling bagel company related to its legal malpractice claim. In  Continue Reading »

Book Value Accurately Reflects FMV of Departing Partner’s Interest

November 20, 2013 | Court Rulings, IRS Regulation

Fancher v. Prudhome, 2013 La. App. LEXIS 318 (Feb. 27, 2013) A withdrawing member of a limited liability company unsuccessfully appealed the trial court’s decision to use the book value of the company’s assets, rather than rely on his expert’s going concern analysis, to capture the fair market value (FMV) of his share. The plaintiff  Continue Reading »

Court Reproves Spouse’s Efforts to Lower Value of Community Business

November 20, 2013 | Court Rulings

Charles v. Charles, 2013 Cal. App. Unpub. LEXIS 2386 (April 2, 2013) “The subtext of this date-of-valuation-of-a-community-business case,” the California Court of Appeal said, “is how a strategy can backfire.” The operating spouse of the business counted on its value declining between the date of separation and the date of trial. Instead the company flourished  Continue Reading »

Florida may join Daubert states

November 6, 2013 | Court Rulings

On April 26, the Florida legislature passed a bill that requires courts to evaluate expert testimony under the Daubert standard. If the governor signs it, the law will go into effect on July 1, and Florida will join the majority of state courts and the federal courts that already have adopted Daubert wholesale or in  Continue Reading »

Court Affirms FMV Determination for S Corp Medical Practice

November 6, 2013 | Court Rulings, Divorce Litigation

Gentile v. Gentile, 2013 U.S. App. LEXIS 5051 (March 13, 2013) In appealing the fair market value determination of his medical practice, the husband claimed that the trial court erred when it included goodwill as a divisible asset and that its conclusion had no support in the record. The husband, a successful plastic surgeon, was  Continue Reading »

Bad behavior in forced buyout triggers marketability discount

October 23, 2013 | Business Plans, Court Rulings, Financial Planning

Wisniewski v. Walsh, 2013 N.J. Super. Unpub. LEXIS 724 (April 2, 2013) Children learn that bad behavior has consequences. An appellate court recently taught a similar lesson to a troublemaking shareholder whose doings forced a buyout. Three siblings each owned a one-third interest in a family business. They had a falling out, and one sued  Continue Reading »

Tax Court Predicates Bonus on Increasing Asset Sale Price

October 9, 2013 | Court Rulings, IRS Regulation, Tax Planning

Aries Communications Inc. v. Commissioner, 2013 Tax Ct. Memo LEXIS 111 (April 10, 2013) What qualifies as a reasonable success fee for the employee who is also the hands-on owner of the company and played a key role in the profitable sale of some of the company’s major assets? This was the issue for experts  Continue Reading »

Expert’s Valuation Method Precludes Improper Inclusion of Goodwill

October 9, 2013 | Court Rulings, Divorce Litigation

Sharp v. Sharp, 2013 Neb. App. LEXIS 58 (April 9, 2013) One of the principal issues in this divorce case was the trial court’s valuation of two medical practices in which the husband had varying interests. On appeal, the husband objected that one valuation wrongly included personal goodwill and the other a “mathematical error” as  Continue Reading »