Eric J. Barr

Valuing Pass-Through Entities (eBook, PDF)

• Format: PDF

Produktbeschreibung

The clarity and guidance valuation analysts have been thirsting for The business appraisal community regularly names the valuation of pass-through entities as a major issue of concern. Courts, appraisers, and the IRS have long been at odds on the topic, and the contention within the appraisal community itself over methods and inputs further complicates the issue. Valuing Pass-Through Entities provides clarity for the analyst tasked with valuation, offering clear explanations of the different perspectives and approaches to the process. Valuing Pass-Through Entities cuts through the chatter to: * Explain the advantages and limitations of different types of pass-through entities * Analyze the different viewpoints currently dividing the appraisal community * Gain a fresh perspective on landmark cases * Explain how to properly utilize a court-tested model * Examine detailed sensitivity analyses of different inputs under the income and market approaches The book includes illustrative examples, templates, and a useful technical supplement, plus case studies that demonstrate the real-world effects of various pass-through entity valuation methods and inputs. Detailed analyses and an easy-to-apply model simplify the process while positively affecting outcomes. The companion website provides the text of landmark court decisions, a blog featuring industry trends and tidbits, additional articles, and the insight of the author and other industry leaders. Valuation requires the successful juggling of multiple variables, many of which can have a major impact on value. Analysts need to know how to balance each factor and apply the appropriate rates and discounts, but a lack of standard practice often leaves the issue too subjective. Valuing Pass-Through Entities clears the air, providing real-world guidelines and tools.

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Produktdetails

• Verlag: John Wiley & Sons
• Seitenzahl: 272
• Erscheinungstermin: 9. Oktober 2014
• Englisch
• ISBN-13: 9781118848685
• Artikelnr.: 41740211

Autorenporträt

ERIC J. BARR is a founder and comanaging member of Fischer Barr & Wissinger LLC and is the Director of the Firm's Business Valuation and Accounting and Assurance Services departments. Barr is a nationally sought-after thought leader, lecturer and webinar presenter on accounting, forensic and valuation matters.

Inhaltsangabe

Foreword xi Preface xiii Acknowledgments xv About the Author xvii CHAPTER 1
Introduction 1 Definition of Value 2 Beauty and Value 2 Premise of Value 4
Approaches to Value 5 The PTE Conundrum 7 CHAPTER 2 The History of Federal
Statutory Tax Rates in Maximum Income Brackets and the Evolution of
Different Forms of Business Entities 11 Origins of the United States
Internal Revenue Code 13 Years 1913 Through 1938 14 Years 1939 Through 1953
19 Years 1954 Through 1985 22 S Corporations 23 Tax on Unreasonable
Compensation 27 General Utilities Doctrine 28 Years 1986 Through 2013 29
Limited Liability Companies 30 Summary 32 CHAPTER 3 Effective Federal
Individual and Corporation Income Tax Rates 41 Effective Federal Income
Taxes on $10,000 of 2012 CPI Adjusted Taxable Income, 1913-2013 42
Effective Federal Income Taxes on $100,000 of 2012 CPI Adjusted Taxable
Income, 1913-2013 51 Effective Federal Income Taxes on $1 Million of 2012
CPI Adjusted Taxable Income, 1913-2013 57 Summary 67 CHAPTER 4 Comparison
of Different Entity Forms 71 Business Life Cycle 71 Benefits and
Limitations of PTEs 75 Financial Statements of C Corporations and PTEs 76
PTE Status and Bank Financing 78 Prevalence of PTEs 79 Change in Form of
Entity 81 CHAPTER 5 Income Approach and Value to the Holder 85 Value to the
Holder versus Value to the Buyer 86 Jurisdictional Issues 87 Delaware Open
MRI Radiology Associates, P.A. v. Howard B. Kessler 87 Bernier v. Bernier
92 Limitations of Delaware Open MRI and Bernier 93 The Modified Delaware
MRI Model 94 Flexibility of the MDMM 98 CHAPTER 6 Inputs to Modified
Delaware MRI Model 101 Normalized Pretax Income 101 Entity-Level Income
Taxes on Pass-Through Earnings 103 Income Retained in the Business 104
Effective Federal and State Income Tax Rates on Pass-Through Income 107
Dividend Tax Rates 111 Summary 121 CHAPTER 7 Income Approach and Investment
Value 123 Measuring Investment Value 124 Deal Structure 126 CHAPTER 8
Income Approach and Fair Market Value 131 Characteristics of FMV 131
Determining FMV 134 Example of Failing to Consider Floor and Ceiling Values
135 CHAPTER 9 Fair Market Value Court Decisions 139 Number of Federal
Estate and Gift Tax Returns 140 Gross v. Commissioner 141 Estate of Heck v.
Commissioner 145 Wall v. Commissioner 146 Estate of Adams v. Commissioner
149 Robert Dallas v. Commissioner 151 Gallagher v. Commissioner 153
Analysis of Cases 154 CHAPTER 10 The Market Approach 157 Revenue Ruling
59-60 157 Appraisal Standards Board Standards 159 AICPA Statement on
Standards for Valuation Services 160 Guideline Public Company Method 161
Guideline Public Company Method and PTE Value to the Holder 163 Guideline
Public Company Method and PTE Investment Value 168 Guideline Public Company
Method and PTE Fair Market Value 169 Guideline TransactionsMethod 171
CHAPTER 11 Individual State Income Taxes 175 Statutory Individual State
Income Tax Rates 175 Effective Individual State Income Tax Rates 176
CHAPTER 12 Discounts, Premiums, Bylaws, and State Laws 181 PTE Agreements
181 State Law 183 Nevada Senate Bill 350 183 CHAPTER 13 Valuing Complex PTE
Ownership Interests 187 Reasons for Complex Capital Structures 187
Option-Pricing Method 188 Example 1: Preferred-Member Units 190 Example 2:
Joint Venture 193 Example 3: S Corporation with Unreasonable
Officer/Stockholder Compensation 196 Appendix A: Checklist 199 Appendix B:
Case Study: Bob's Cruises 215