Blog

Last month the U.S. Tax Court released its memorandum opinion in Astleford v. Com. (TC Memo 2008-128), a case dealing with the minority and marketability discounts applicable to family limited partnerships. In Astleford, the widow of a Minnesota real estate tycoon contributed her interests in real estate (which included real estate partnerships and trusts) to a family limited partnership (FLP) for the benefit of the parties’ children. In valuing the […]

I may have mentioned this before on this blog, but it is striking to me how many accountants and valuational professionals regard court decisions as monolithic. At NACVA chapter meetings, I have heard CPAs say that “you must do this” or “you can’t do that” because of some court decision or IRS position. But we must not forget that all court decisions are, to some extent, fact-sensitive and case-specific. The […]

The statutory and rules definitions of “income,” as provided by 23 Pa.C.S. § 4302 and Pa.R.C.P. 1910.16-2(a) include “gains derived from dealings in property” (§ 4302) or “net income from business or dealings in property” (Pa.R.C.P. 1910.16-2). Neither the statute nor the rules specifically mention “capital gains.” Under the Internal Revenue Code, a “capital gain” is the gain realized upon the sale or exchange of a species of property known […]

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 […]

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 […]

From the TaxProf Blog: Shari Motro (Richmond) has published A New “I Do”: Towards a Marriage-Neutral Income Tax, 91 Iowa L. Rev. 1509 (2006). Here is the abstract: The federal income tax system treats married couples as if each spouse earned approximately one-half of the couple’s combined income through a mechanism called “income splitting.” For many one-earner and unequal-earner couples, income splitting produces a significant advantage, a “marriage bonus,” by […]