FVC2426. Tax Affecting – The Debate Continues

We now have two tax court cases that have “upheld” tax affecting pass-through entities, but the vast majority continue to reject it. Where are we currently on the issue? What are the cost of capital researchers’ positions regarding the impact of taxes on their research? How does the hypothetical buyer factor into the decision? How does current tax law impact an appraiser’s reasoning to tax impact or not to tax impact the earnings stream in valuation?

Learning Objectives:

• Identify the rationale both for and against tax affecting pass-through entities in valuation.
• Evaluate recent case law impacting the decision on whether or not to tax affect.
• Assess the impact of tax affecting on valuation.
• Apply the due diligence required by appraisers when deciding whether or not to tax impact pass-through entities in valuation.