BCC Advisers

Blog - 2020 Archive

December 30, 2020

In Kress v. United States, a federal district court accepted the practice of tax affecting the earnings of so-called “pass-through” entities. It also rejected the application of a premium to reflect the tax advantages of owning a minority interest in a pass-through business. This article summarizes this case and explains why it’s fueling renewed interest in the tax-affecting debate, despite its limited precedential value. A sidebar highlights another key issue addressed in Kress — the effect of family transfer restrictions on the value of business interests for gift and estate tax purposes.

Read More about To tax affect or not to tax affect?

December 17, 2020

Professional standards require valuation experts to perform assignments with impartiality, objectivity and independence. This article summarizes a recent U.S. Tax Court opinion that serves as a cautionary tale for attorneys who would seek to influence an expert’s conclusions. The court found that a law firm’s interference in the valuation process tainted the expert’s opinion and rendered it “useless.” A sidebar explains why taxpayers can’t hire experts as an “insurance policy” against blatant tax avoidance strategies.

Read More about Expert independence: Interfere at your own risk

December 10, 2020

Struggling businesses face different financial challenges than healthy ones do. In this article we discuss how business valuation experts factor these differences into their estimations when valuing troubled companies.

Read More about Valuing distressed companies

October 15, 2020

Increased gift tax exemptions paired with lower values create a unique opportunity to efficiently transfer assets and ownership interests, however, the window may be closing. BCC financial analyst Jackson Arndt discusses why now is the time to act.

Read More about Valuations for gifting amidst political uncertainty

August 20, 2020

From the September/October 2019 issue of BCC Advisers Litigation & Valuation Report

The cost of capital is an important consideration when valuing a business under the income approach. Here we explain how business valuation experts determine the “optimal” capital structure for a business and why it matters.

Read More about The cost of capital counts!

August 7, 2020

After humming along quite happily with a high level of confidence into early 2020, Iowa’s mergers and acquisitions market briefly went into shutdown mode this spring with the arrival of the COVID-19 pandemic. BCC shareholder Tom Cavanagh contributes his thoughts along with other Des Moines M&A professionals on the current environment and outlook for M&A. Article by Joe Gardyasz of the Business Record.

Read More about After hitting pause, M&A market in Central Iowa adjusting to new realities

August 6, 2020

From the November/December 2017 issue of BCC Advisers Litigation & Valuation Report

Perceived independence is critical when it comes to the effectiveness of expert witness testimony. In this article we discuss a case in which the U.S. Tax Court rejected an expert’s testimony on the reasonableness of compensation paid to shareholder-employees because he failed to provide an “independent and objective analysis.”

Read More about Court rejects compensation expert’s “result oriented” approach

July 30, 2020

From the July/August 2018 issue of BCC Advisers Litigation & Valuation Report

Negative events — including defamation, securities fraud, product liability, intellectual property infringement, and data breach and other cybercrime proceedings — can seriously impair a company’s reputation. This article explains the types of damages and the tools financial experts use to quantify losses.

Read More about What’s in a name? Quantifying damages for reputational harm

July 23, 2020

From the BCC "Baton" - 2019 Q3

Transaction multiples may make the theory of business valuation seem relatively straightforward. However, valuing a company can quickly veer into a challenging world of discount rates, weighted average cost of capital, and other obscure concepts, making it easy to lose sight of the big picture. We give you five valuation tips to help you maintain perspective.

Read More about Unravelling Transaction Multiples, Business Valuation Mysteries

July 8, 2020

From the May/June 2017 issue of BCC Advisers Litigation & Valuation Report

The IRS and C corporations often disagree about the reasonableness of owners’ compensation. C corporations want payments to shareholder-employees to be classified as deductible compensation expense — but the IRS would prefer these payments to be classified as nondeductible dividends. This article explains the factors that persuaded the U.S. Tax Court to uphold $11 million in deductions for salaries, bonuses and directors’ fees paid to two shareholders in 2003 and 2004.

Read More about Owners’ compensation: What’s reasonable for C corporations?
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