Expert Business Valuation Services

Martin Greene to Speak at Business Valuation Conference

March 29, 2018 By Martin Greene

Greene Valuation’s founder and principal, Martin Greene, is slated to present a talk at the upcoming 20th Annual Business Valuation Conference, produced by the Foundation for Accounting Education.

The event will be held May 21, 2018, at the FAE Learning Center, 14 Wall Street, 19th Floor, in New York.

Greene’s presentation, “Non-controlling Interests in Real Estate Holding Companies—What Tax Court Has Been Telling Us,” will focus on the chronology of valuation methods used by U.S. Tax Court over the last 40 years for non-controlling, nonmarketable interests in operating real estate holding companies.

He will discuss the misconceptions that many users—even valuators—may have when determining the fair market value of interests in these entities, some of which include applying net asset value methods. He’ll examine the limitations of and differences between the real estate appraiser’s value of the underlying property and the FMV of non-controlling interests in entities holding these properties.

Additionally, his program will explore applying REITs and other market data from publicly traded real estate entities. Finally, there will be a discussion of issues commonly seen in the northeast and their impact on our valuation conclusions.

Greene will present at 4:10 p.m.

The conference’s keynote speaker is James R. Hitchner, CPA/ABV/CFF, ASA, managing director, Financial Valuation Advisors; president, Financial Consulting Group; and CEO of Valuation Products and Services. He will present highlights from his seven-part webinar series, “Best Practices: Business Valuation Methods,” covering topics such as discounted cash flow method, capitalized cash flow method, S corps and more.

The conference kicks off at 8:30 a.m. with a light breakfast, followed by opening remarks from Jeffrey F. Gibralter, partner at Klein Liebman & Gresen.

Other speakers include:

Karen Miles, CPA/ABV, ASA, MBA, managing director and head of Southern California financial advisory services at Houlihan Lokey
Toby Tatum, CVA, CBA, MAFF, MBA, Owner, Alliance Business Appraisal
Jean J. Han, CPA/ABV/CFF, CDFA, JD, Partner, Baker Tilly Virchow Krause
Stacy A. Statkus, CVA, CDFA, CFE, JD, MBA, Senior Vice President, MPI
Nancy Edwards Cronin, PE, President and Managing Partner, ipCapital Group Inc.
Alozie N. Etufugh, Esq., Managing Partner, Etufugh Law, PLLC
David Gralnick, CPA/ABV, Partner, Klein Liebman & Gresen, LLC
Joshua S. Sechter, CPA/ABV, CFE, Senior Associate, Klein Liebman & Gresen, LLC

Conference co-chairs include:

Mitchell H. Chosak, CPA/ABV/CFF, CFE, CGFM, CPP, Senior Forfeiture Financial Specialist, Forfeiture Support Associates, LLC (FSA LLC)
• Jean J. Han, CPA/ABV/CFF, CDFA, JD, Partner, Baker Tilly Virchow Krause, LLP

Established in 1972, the Foundation for Accounting Education is an organization that administers an important strategic initiative of the New York State Societies of Certified Public Accountants. The Foundation for Accounting Education provides continuing education —accounting, auditing, taxation and more — to certified public accountants in New York State.

The business valuation conference will earn attendees eight advisory services (NYSED) / specialized knowledge (NASBA) credits. Foundation for Accounting Education members pay $335 for the conference; non-members pay $420.

Filed Under: Events

Business Owners’ Salaries Under IRC Section 199A

March 27, 2018 By Martin Greene

Late last year, the federal government enacted the Tax Cuts & Jobs Act of 2017, which ushered in comprehensive changes to the nation’s tax code.

Among the changes brought in by the new law is code section 199A, which enables certain owners of pass-through entities an up to 20% deduction of their income and significant tax savings. The section is complex and many factors go into the formulas for determining this deduction.

For pass-thru entity owners, such as owners of S Corporations, their W-2 wages can be one factor for this deduction, and changing W-2 wages can maximize the section 199A deduction. Frequently, owners have estimated wages arbitrarily, with little empirical evidence to back up their decisions. This may be the time to look closely and properly and appropriately determine compensation.

Determining the reasonable compensation is a complex matter. The IRS has published guidance and the U.S. Tax Court has opined in numerous recent cases.

At Greene Valuation, we determine reasonable compensation for closely held business owners, whether in a standalone compensation report or a comprehensive business valuation. We use empirical data and apply multiple methods as averred by the Court and IRS.

Call us today and let’s get to work helping your client taking advantage of this new code section. Implementing this now can maximize the impact on 2018 taxable income.

Filed Under: Tax code

What Attorneys Need to Know About Marketability Discounts

January 15, 2018 By Martin Greene

While the IRS identifies many valuation concepts to consider in preparing valuation reports, they less frequently specifically require methods to be used or how they should be applied. One such exception is Revenue Ruling 77-287. This Revenue Ruling outlines applying restricted stock transactions to determine marketability discounts and identifies the most important attributes to determining the discount’s magnitude.

Based on a SEC Study

The Revenue Ruling was based on financial metrics of a study performed by the Securities and Exchange Commission analyzing 1960s restricted stock transactions, which interestingly preceded current rules for determining restrictions under their Rule 144. Some criteria enunciated in the Revenue Ruling still provide a reasonable basis, whereas others do not.

Do the reports that you receive from your valuation experts identify and explain this important Revenue Ruling? Have your experts analyzed the data based on the criteria outlined in the Revenue Ruling?

Subject Expert

Martin Greene CPA\ABV, ASA, is an expert in determining marketability discounts. He has co-authored an article on how valuation experts should evaluate restricted stocks to comply with this Revenue Ruling. His article, published by Business Valuation Resources, is a treatise on marketability discounts.

Reviews

The authors of the Stout Restricted Stock Study™ (formerly FMV Restricted Stock Study™) have praised Mr. Greene’s work, and Willamette Management Associates, formerly owned by Shannon Pratt, quoted this work and included these findings with the most prestigious studies of the last 40 years. Furthermore, a recent panel of valuation experts in a national webinar on marketability offered by Business Valuation Resources identified and applied steps from this article.

Filed Under: Valuation

Fair Market Value

December 2, 2017 By Martin Greene

Sometimes the concept of fair market value may not adequately be understood. Unfortunately for both attorneys and CPAs, sometimes judges and the IRS may not completely comprehend fair market value either, and what may be worse, other valuators also may not completely grasp this notion. By definition, fair market value should be based on hypothetical buyers and sellers; however, at times circumstances applicable to the actual buyer or seller are substituted for the hypothetical buyer or seller — and this can significantly change value. We see this difficulty comes when assuming events surrounding the actual decedent, donor, or litigant are applied to the hypothetical seller, which frequently can even overstate the value. In fact, several tax court decisions have been reversed by applying actual fact patterns to hypothetical buyers and sellers.

At Greene Valuation, we have instituted procedures to ensure this will not happen. We explain this carefully in our reports and identify the hypothetical factor pattern versus the actual. We also thoroughly explain this significant difference to the courts and to the IRS.