Valuation & Litigation Advisory Blog

This month's issue of Valuation & Litigation Advisory Insights includes the following articles:

• Tiered Valuation Discounts: The Tax Court's Position on the Russian Doll
• Guidance Issued on Valuation of Partial Interests
• Quantifying Economic Losses When Mitigating Circumstances Come Into Play

Tiered Valuation Discounts: The Tax Court's Position on the Russian Doll
By Sean R. Saari, CPA/ABV, CVA, MBA

As little boys or girls, many of us had an opportunity to play with a "matryoshka" doll - also known as a Russian nesting figurine.  These were the statuettes which, upon opening the outer shell, revealed smaller figurines with even smaller figurines nested inside of them. I know that every time I spent the day at my grandparents' house, I was always intrigued by the statuettes and their many layers. What I did not know, however, was how similar the structure of many family limited partnerships and holding entities are to these dolls. Not only is it difficult to estimate how many "layers" of statuettes are within a single Russian nesting figurine simply by looking at it, it is also difficult to determine how valuation discounts should be applied to tiered ownership structures in which one company has an ownership in another entity, which has an ownership in another entity, which... you get the picture.

Learn more in this video.

Guidance Issued on Valuation of Partial Interests

After a six-year development period, the American Society of Appraisers (ASA) recently added a new procedural guideline to its Business Valuation Standards: PG-2 - Valuation of Partial Ownership Interests. Although not a binding standard, PG-2 offers valuable guidance to ASA members and other business valuators on this difficult and often controversial subject. This article looks at some of the highlights.

Click here to read this article.

Quantifying Economic Losses when Mitigating Circumstances Come Into Play

It's easy to focus on quantifying a plaintiff's economic losses during a trial and overlook the duty to mitigate damages. But the plaintiff does bear some responsibility for taking reasonable steps to avoid or minimize damages. This article looks at a case in which a printing company's failure to mitigate damages by pursuing an inexpensive option resulted in its claim being denied. For a damages expert, estimating the impact of various mitigation alternatives requires considerable professional judgment.

Click here to read this article.

Prior issues are available in the E-Newsletter Archive of our Valuation & Litigation Advisory Services Resource Center. If you would like to subscribe to this free, monthly, business valuation and litigation support e-newsletter, send an email to info@skodaminotti.com.

If you have any questions about any of these articles, post a comment below or please contact our Valuation & Litigation Advisory Services Group at 440-449-6800.