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Mercer Capital’s newsletter Value Matters recently published an article which points out a dilemma faced by valuation professionals in appraising businesses that have taken out life insurance to fund a buy-sell agreement. While the life insurance proceeds may be intended to satisfy the company’s liability to purchase the deceased shareholder’s stock, they might be viewed alternatively as a non-operating asset. Mercer suggests two options: (1) The life insurance proceeds may […]

An IRS Private Letter Ruling (No. 200646003) clarifies the law with respect to the tax treatment of stock options that are distributed by constructive trust in divorce to the non-employee spouse. This PLR confirms that the non-employee spouse who directs the exercise of options in-the-money is responsible for the federal income tax and should receive a credit for the income tax withheld by the employer. The important part of this […]

Short week: happy Thanksgiving! FamilyLaw Prof Blog reports on a New York State case in which a divorce lawyer was held liable for the client’s loss resulting from a delay in transferring retirement funds. An important reminder to us all!

A fun and entertaining discussion of the premarital agreement signed by Britney Spears and Kevin Federline (not to mention their “faux wedding”) is posted here.

The courts continue to march away from the practice, widely-accepted in the valuation community, of tax-affecting pass through earnings in business valuation. Following in the footsteps of the Tax Courts in Dallas, Gross, Heck, and Adams, the Supreme Court of Rhode Island recently rejected the valuation of an expert who capitalized the earnings of a Subchapter S corporation after deducting the shareholder-level income taxes (i.e., “tax-affecting”) in a business valuation […]

The recent edition of the Journal of the American Academy of Matrimonial Lawyers contains an interesting article describing various approaches to personal and enterprise goodwill. There is a handy list of which states consider goodwill (both types) to be separate property, which states consider goodwill to be marital property, and which states distinguish between the two types of goodwill. The third section of the article describes five different valuation approaches […]