The issue of solvency, and insolvency, frequently arises in bankruptcy matters where a claim is made that one party (the debtor) made a transfer (while insolvent, or which transfer caused insolvency) with the intent to hinder, delay or defraud a creditor. Of course, the debtor typically claims that the transfer was made in good faith […]
Read More1. THE TAX RULES: The tax rules did not allow amortization (i.e. the ratable expensing/deducting) of Goodwill until 1993 (actually, after 8/10/93). With minor exception due to transition tax laws in 1993, if a taxpayer made an acquisition prior to 1993 that gave rise to Goodwill, the Goodwill was not deductible and was forever left […]
Read MoreIndividuals and legal entities that own interest in businesses find it relatively easy to separate the various rights that ownership in an entity represents. One example of such a division is the transfer of voting rights in common stock from the individual owner of the common stock to another party. This can be done by […]
Read MoreThe Hancock Firm regularly values debt issued by privately-held companies and other commitments or contingencies involving the private company. When the subject company has financial statements that have been reported upon by independent accountants or auditors, substantive insights into the obligations or alleged obligations may be ascertained. For example, take the following edited excerpt from […]
Read MoreWhether valuators of businesses should “tax-affect” or “not tax-affect” an S corporation’s earnings is a controversial issue. The Internal Revenue Service is increasingly scrutinizing taxpayers and their business valuators fail to address the tax-affecting issue in valuations of S corporations. Any valuation of an S corporation (or other pass-through entity) should consider specific adjustments that […]
Read MoreThe courts, especially the Tax Courts, have frequently employed hindsight to help establish and adopt fair market values for businesses and assets. Hindsight evidence is facts and circumstances that only became known after the valuation date. In many cases, the courts have taken such actions because the business valuator (or real estate appraiser) brought to […]
Read MoreTypically, buyers prefer asset sales, whereas sellers prefer stock sales. Buyers like the enhanced tax benefits of asset sales and the less exposure to corporate liabilities, and sellers like stock sales due to less income taxes. An asset sale is the purchase of an aggregation of individual assets. A stock sale is the purchase of […]
Read More…but you have inadvertently positioned yourself to be a one-person Deal Killer for, what could be, your most important deal in years? Your decision to sell your business to outsiders or to new partners may be motivated by a variety of reasons, including your age, business stagnation, boredom, a desire to sell at the peak, […]
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