Trying Divorce Cases “Overview of the Business

Transcript:Trying Divorce Cases “Overview of the Business:
Trying Divorce Cases “Overview of the Business Valuation Process” Marc Bello, CPA/ABV, CVA, MAFF, MST October 20, 2017 Contact Information: Marc Bello Edelstein & Company LLP 160 Federal Street Boston, MA 02110 mbello@edelsteincpa.com 617-478-3423 http://www.edelsteincpa.com/about-us/leadership.aspx Objectives How to recognize if a Business Valuation may be required Overview and Understanding of the Business Valuation Process Discussion with your client. Objective #1 How to recognize if a Business Valuation may be required Ask your client Request Financial Information: Tax Returns Financial Statements Internet Research http://corp.sec.state.ma.us/corp/corpsearch/corpsearchinput.asp How To Recognize If A Business Valuation May Be Required What do you do? Do you have ownership interest in your business? Do you own the whole business? If not, what percent do you own? What type of business is it? (service, manufacturing, medical, technology) How many employees to you have? Do you have a management team? Is your business local, national or global? Communication With A Client Financial Information Schedule C – An unincorporated business and/or a single member limited liability company. Pass Through Business – A business which could be a limited liability company, partnership, S Corporation, Trust An Individuals ownership in a C Corporation would not be disclosed on the individuals tax return. Business Entities Identified on Personal Income Tax Return Objective #2 The Business Valuation Process Overview of the Valuation Process Overview of the Valuation Process Standard of Value Fair Market Value “The price at which the property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts.” Fair Value In the states that have adopted the Uniform Business Corporation Act, the definition of fair value is: “Fair Value,” with respect to a dissenter’s shares, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable. Standard of Value Bernier v. Bernier – SJC-09836 449 Mass. 774 (2007) (Potential departure from FMV) “the judge must take particular care to treat the parties not as arm’s-length hypothetical buyers and sellers in a theoretical open market but as fiduciaries entitled to equitable distribution of their marital assets”. Fair Market Value The IRS has defined FMV in Revenue Ruling 59-60 as follows: “The