Valuing Pass-Through Entities

Index

• Accumulated earnings tax
• Act of 1862
• American Institute of Certified Public Accountants (AICPA)
• Appraisal Standards Board
• Asset (cost) approach to value

• Balance sheet approach to value
• Bank financing, and PTEs
• Bernier v. Bernier
• Black-Scholes-Merton (BSM) model
• Break points, in option-pricing method
• Built-in gains tax (“BIG” tax)
• Business life cycle

• Capitalization of earnings method
• Case study
• C corporations
  • after-tax cash flows of, versus PTE
  • after-tax cash flow variability of
  • change to partnership or LLC by
  • change to S corporation by
  • disadvantages of
  • double taxation on sale of assets and
  • excess compensation adjustment and
  • financial statements of
  • General Utilities Doctrine and
  • limited liability protection of
  • operating phase and
  • partnership or LLC change to
  • PHC tax and
  • PTEs compared with
  • S corporation change to
  • second level of taxation on
  • shareholder compensation deductibility for
  • start-up phase and
  • tax benefit of purchaser’s goodwill and
  • tax-exempt dividends of
  • tax on built-in gains (“BIG” tax) and
• C corporation statutory income tax rate
  • with $10,000 of income
  • with $100,000 of income
  • with $1 million of income
  • wide range of, for 1913–2013
  • for years 1909–1938
  • for years 1939–1953
  • for years 1954–1985
  • for years 1986–2013
• C corporation statutory income tax rate comparisons
  • businesses with $100,000 of income
  • individuals with income of $10,000
  • PTEs with $10,000 of income
  • PTEs with $1 million of income
• Checklist for valuing PTEs
• Commissioner of Internal Revenue ...