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Preferred Shareholders Prevail in Trados Transaction

April 2014 | Issue 73 Trados, Inc. was sold to another company for $60 million in July of 2005.  The sale proceeds were distributed as follows; Trados management received $7.8 million, preferred shareholders received $52.2 million and common stockholders received nothing. Certain common stockholders sued.  The story is told in a Delaware Chancery matter called [...] More...

Tax Court Takes a New Valuation Line on Built-in Capital Gains

March 2014 | Issue 72 U.S Tax Court Judge David Gustafson was faced with the task of determining the fair market value of an interest in an investment company named Pearson Holding Co. (“PHC”).  The case is Estate of Richmond v. Commissioner T.C. Memo 2014-26 (February 11, 2014). At the time of her death, December [...] More...

Is a Member’s Interest Worth More Than an Assignee’s Interest?

February 2014 | Issue 71 A recent Tax Court case involved the valuation, for estate tax purposes, of a 16.667% interest in a real estate holding company.  The company, called 37-41 East 18th Realty Co., LLC, owned a 78,000 square foot commercial building in Manhattan.  The case is Estate of Tanenblatt v. Commissioner, T.C. Memo. [...] More...

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Employee Stock Ownership Plans (ESOPS) Valuations

An ESOP is an employee retirement plan which has been specifically established to hold shares of the sponsoring company as an investment asset for the retirement of participating employees.

The Department of Labor requires that the assets in the plan be valued annually.  When the sponsoring company of the ESOPis a privately-held company, with no established trading market for its shares, it is necessary to have a business valuation performed in order to determine the fair market value of the company shares.

Hempstead & Co. has been providing ESOP valuations for many years, and is familiar with the special valuation issues that they entail.