{"id":204,"date":"2011-07-31T22:54:55","date_gmt":"2011-07-31T22:54:55","guid":{"rendered":"http:\/\/ua-cpas.com\/blog\/?p=204"},"modified":"2011-07-31T22:54:55","modified_gmt":"2011-07-31T22:54:55","slug":"tax-affecting-in-estate-business-valuation","status":"publish","type":"post","link":"https:\/\/www.ua-cpas.com\/blog\/index.php\/2011\/07\/31\/tax-affecting-in-estate-business-valuation\/","title":{"rendered":"Judge Invalidates Tax-Affecting in Estate Business Valuation"},"content":{"rendered":"<p><em>Estate of Gallagher V. Commissioner<\/em><\/p>\n<p>A recent decision from the U.S. Tax court tackles a myriad of issues pertaining to private company appraisal, most notably the issue of tax-affecting. The case involves the business valuation of a decedent\u2019s minority interest in a privately held newspaper publishing company. The taxpayer\u2019s expert made tax affected adjustments by assuming a 39-percent income tax rate in calculating the company\u2019s future cash flows before discounting the company\u2019s future earnings to their present value. He also assumed a 40 percent marginal tax rate in calculating the applicable discount rate. <!--more--><\/p>\n<p>Tax affecting \u201cis the discounting of estimated future corporate earnings on the basis of assumed future tax burdens imposed on those earnings\u201d .Dallas v. Commissioner, T.C. Memo 2006-212.\u00a0<\/p>\n<p>The Judge rejected the taxpayer\u2019s expert tax affecting adjustments stating that they \u201cimpose an unjustified fictitious corporate tax rate burden on [the company\u2019s] future earnings.\u201d Other issues addressed in this case include minority discounts, marketability discounts, and DCF (Discounted Cash Flow) analysis.\u00a0 To view the entire case, click the link below: <a href=\"http:\/\/ua-cpas.com\/blog\/wp-content\/uploads\/2011\/07\/TaxAffectingGallagher.pdf\">Estate of Gallagher v. Commissioner<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Judge rejected tax affected adjustments of future earnings of S-Corp in business valuation for estate taxes. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30,31,6,13],"tags":[52,82],"class_list":{"0":"post-204","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business-valuations","7":"category-business-valuations-litigation-support","8":"category-estate-trusts-guardianships","9":"category-litigation-support","10":"tag-business-valuations","11":"tag-estate-taxes","12":"entry"},"_links":{"self":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=204"}],"version-history":[{"count":0,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/204\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}