Valuing Pass-Through Entities.

Valuing Pass-Through Entities -- Contents -- Foreword -- Preface -- Acknowledgments -- About the Author -- Chapter 1: Introduction -- Definition of Value -- Beauty and Value -- Control versus Noncontrolling Interests -- Standards of Value -- Premise of Value -- Approaches to Value -- The PTE Conundrum -- Chapter 2: The History of Federal Statutory Tax Rates in Maximum Income Brackets and the Evolution of Different Forms of Business Entities -- Origins of the United States Internal Revenue Code -- Years 1913 Through 1938 -- Years 1939 Through 1953 -- Years 1954 Through 1985 -- S Corporations -- Tax on Unreasonable Compensation -- General Utilities Doctrine -- Years 1986 Through 2013 -- Limited Liability Companies -- Summary -- Chapter 3: Effective Federal Individual and Corporation Income Tax Rates -- Effective Federal Income Taxes on 10,000 of 2012 CPI Adjusted Taxable Income, 1913-2013 -- Individual Income Taxes -- C Corporation Income Taxes and Dividend Taxes -- Comparison of PTE and C Corporation Income Taxes -- Effective Federal Income Taxes on 100,000 of 2012 CPI Adjusted Taxable Income, 1913-2013 -- Individual Income Taxes -- C Corporation Income Taxes and Dividend Taxes -- Comparison of PTE and C Corporation Income Taxes -- Effective Federal Income Taxes on 1 Million of 2012 CPI Adjusted Taxable Income, 1913-2013 -- Individual Income Taxes -- C Corporation Income Taxes and Dividend Taxes -- Comparison of PTE and C Corporation Income Taxes -- Summary -- Chapter 4: Comparison of Different Entity Forms -- Business Life Cycle -- Start-Up Phase -- Operating Phase -- Sale of Business -- Benefits and Limitations of PTEs -- Summary of PTE Benefits and Limitations -- Financial Statements of C Corporations and PTEs -- PTE Status and Bank Financing -- Prevalence of PTEs -- Change in Form of Entity -- C Corporation to S Corporation.

C Corporation to Partnership or LLC -- S Corporation to Partnership or LLC -- Partnership to LLC -- Partnership or LLC to C Corporation -- S Corporation to C Corporation -- Chapter 5: Income Approach and Value to the Holder -- Value to the Holder versus Value to the Buyer -- Jurisdictional Issues -- Delaware Open MRI Radiology Associates, P.A. v. Howard B. Kessler -- Bernier v. Bernier -- Limitations of Delaware Open MRI and Bernier -- The Modified Delaware MRI Model -- Flexibility of the MDMM -- Chapter 6: Inputs to Modified Delaware MRI Model -- Normalized Pretax Income -- Entity-Level Income Taxes on Pass-Through Earnings -- Income Retained in the Business -- Effective Federal and State Income Tax Rates on Pass-Through Income -- Maximum Federal and State Individual Statutory Income Tax Rates -- Using 40, 0, 29.4, or Some Other Fixed Percent -- Application of Nominal Statutory Rates for Each Income Bracket -- Overall Effective Income Tax Rates Indicated on the Owner's Individual Income Tax Returns -- "With and Without" Method -- Dividend Tax Rates -- Applying Statutory Federal Dividend Tax Rates and Effective State Income Tax Rates -- Using the "With and Without" Method -- Summary -- Chapter 7: Income Approach and Investment Value -- Measuring Investment Value -- Normalized Pretax Income and Income Retained in the Business -- Income Taxes -- Discount/Capitalization Rates -- Deal Structure -- Purchasing Assets -- Purchasing Equity -- Complex Capital Structures -- Chapter 8: Income Approach and Fair Market Value -- Characteristics of FMV -- Value to the Hypothetical Seller -- Value to the Hypothetical Buyer -- Determining FMV -- Example of Failing to Consider Floor and Ceiling Values -- Chapter 9: Fair Market Value Court Decisions -- Number of Federal Estate and Gift Tax Returns -- Gross v. Commissioner -- Estate of Heck v. Commissioner.

Wall v. Commissioner -- Estate of Adams v. Commissioner -- Robert Dallas v. Commissioner -- Gallagher v. Commissioner -- Analysis of Cases -- Chapter 10: The Market Approach -- Revenue Ruling 59-60 -- Prior Sales of the Stock and the Size of the Block to Be Valued -- Market Price of the Stock of Corporations Engaged in the Same or a Similar Line of Business -- Appraisal Standards Board Standards -- AICPA Statement on Standards for Valuation Services -- Guideline Public Company Method -- Guideline Public Company Method and PTE Value to the Holder -- Guideline Public Company Method and PTE Investment Value -- Guideline Public Company Method and PTE Fair Market Value -- Guideline TransactionsMethod -- Limited Information -- Guideline Transactions -- Normalized versus Historical Data -- Purchase Price Allocation -- Number of Transactions -- Chapter 11: Individual State Income Taxes -- Statutory Individual State Income Tax Rates -- Effective Individual State Income Tax Rates -- Chapter 12: Discounts, Premiums, Bylaws, and State Laws -- PTE Agreements -- State Law -- Nevada Senate Bill 350 -- Chapter 13: Valuing Complex PTE Ownership Interests -- Reasons for Complex Capital Structures -- Option-Pricing Method -- Example 1: Preferred-Member Units -- Example 2: Joint Venture -- Example 3: S Corporation with Unreasonable Officer/Stockholder Compensation -- Appendix A: Checklist -- Appendix B: Case Study: Bob's Cruises -- Part I: Introduction -- Sam -- The Opportunity -- Business Due Diligence -- Part II: Sam's Cruises -- Normalization -- Income Taxes -- Part III: Valuing Sam's Cruises -- Valuation Multiple -- Sanity Check -- Value to Sam -- Part IV: Valuing Betty's Cruises -- Normalized After-Tax Cash Flows -- Sanity Check -- Part V: Closing The Deal -- After-Tax Purchase Cost -- Comparison of Transactions -- Part VI: Looking Back -- About the Website.

Index -- End User License Agreement.

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Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2024. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.