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Dell Appraisal Spawns a Multitude of Valuation Approaches

February 2017 | Issue 84 Introduction A Delaware Chancery appraisal case involving computer company Dell Inc. gave rise to a multitude of valuation measurements.  It is instructive to see how the court sorted through them in coming up with its final appraisal conclusion.  The case is In re Appraisal of Dell Inc., 2016 Del. Ch. LEXIS […] More...

Future Expected Investment Strategy Determines Value of FLP Interest

January 2016 | Issue 83 The estate of Helen P. Richmond held a 23.44% interest in Pearson Holding Co. (“PHC”), a family investment company.  The estate valued this holding at $3,150,000, later adjusted to $5,046,000.  The IRS valued it at $7,330,000.  This difference of opinion was aired in US Tax Court in a case called Estate […] More...

Do Attached Strings Affect the Value of a Gift?

October 2015 | Issue 82 Steinberg v. Commissioner, 145 T.C. No. 7 (Sept. 16, 2015) explores how a contingent liability accepted by a donee can impact the value of a gift for gift tax purposes. Introduction In 2007, Petitioner Jean Steinberg, age 89, entered into a net gift agreement under which she gave her four […] More...

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Fresh Start Accounting Valuations

Generally, upon emergence from Chapter 11 of the U.S. Bankruptcy Code, a company’s balance sheet is required to be restated to fair value, in accordance with the principles of fresh start accounting.   AICPA SOP 90-7 states that the reorganization value of an entity adopting fresh start accounting should be allocated to the entity’s assets in conformity with the procedures specified by Statement of Financial Accounting Standards No. 141R.  SFAS 141R requires the reorganization value to be allocated to its assets and liabilities based on their fair values.

The steps involved include estimation of reorganization value, allocation of reorganization value and goodwill to various reporting units, and estimation of the fair value of tangible and intangible assets.  The assets to be valued include inventory, real property, machinery and equipment, technology, customer relationships, trade names and goodwill.