Jelke Reversal
Featuring John Porter of Baker Botts, Will Frazier of Howard Frazier Barker Elliott, and Michael Paschall of Banister Financial, Inc.
Telephone Dial-In Audio Conference
Thursday, January 17, 2008
10:00am -11:40pm Pacific Time
Register for Conference for $249
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Presented by Business Valuation Resources, LLC. Earn TWO INTERACTIVE CPE credits for participating in this conference. Only $249.00 for a single dial-in connection. Use your conference room and the whole office can listen in. Two CPE credits are available for each additional listener sharing the same phone connection for only $49.00 per person.
Program Level: Basic
Prerequisites: None
Advance Preparation: None
Instructional Method: Group-Live
Why Should You Attend?
Last month the 11th Circuit Court of Appeals approved a “dollar-for-dollar” reduction for the entire built-in capital gains tax liability of a minority interest in a closely held corporation, overruling the Tax Court’s prior allowance of only a partial discount. In Estate of Jelke v. Comm’r (November 15, 2007) the Court reviewed the historical evolution of corporate tax reform and related case law—including the 5th Circuit’s decision in Estate of Dunn (2002)—to come to an accord “with the simple yet logical analysis of the tax valuation issues set forth [in Dunn], providing practical certainty to tax practitioners, appraisers and financial planners alike.”
“The case is a major win for the taxpayer,” comments Will Frazier, who appraised the estate’s 6.44% interest in the original proceedings. “It should settle, once and for all, the issue on the applicability of the built-in capital gains tax liability in valuing equity in a C corporation.” After getting a poor result in the Tax Court, “the taxpayers almost did not want to appeal,” he adds. “Their advisors and I had to beg them.” They ended up retaining John Porter (Baker Botts) to take on the appeal. “A good choice on their part.”
The only downside of the case: the Court declined to disturb the Tax Court’s determinations of discounts for lack of marketability (15%) and control (10%). (“These two issues are affirmed without further discussion.”) In Frazier’s view, this represented another “split the difference” opinion, the federal appeals court deferring to the lower court’s discretion on the discount issue, perhaps in preference for a “bright line” rule on imbedded capital gains.
Join Will Frazier of Howard Frazier Barker Elliott, Inc , John Porter of Baker Botts in Houston, and Michael Paschall of Banister Financial, Inc. for expert analysis on the Jelke reversal.
Learning Objectives:
- Learn how this case evolved and the key arguments influencing the court’s decision
- Find out the experts’ opinion on the stability of the ruling
- Discuss implications of this decision on the BV profession and how it will affect your practice
Program Outline:
- Brief introduction to the experts and topic
- Panelist Presentation on the Jelke Reversal:
- How Did This Case Evolve?
- What Are the Key Issues Affecting the Court’s Decision?
- What is the Stability of This Ruling Concerning this Practice by BV Practitioners?
- Is There Any Application of All or Part of This Rationale for the Same Issue in Partnerships, LLCs and S Corps?
- A Discount is Only One Leg of a Three Legged Stool: The Jelke Court Did Not Disturb the 10% DLOC or the 15% DLOM
- Panelist and Audience Q & A
- Closing Remarks
Panel Includes:
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William H. Frazier, ASA Will is a principal and founder of the firm of Howard Frazier Barker Elliott, Inc, and has thirty years of experience in business valuation and corporate finance. As an Accredited Senior Appraiser of the American Society of Appraisers (ASA) since 1987, he has participated as an appraiser in numerous U.S. Tax Court cases, including testimony in Jelke, McCord, Dunn and Gladys Cook. He currently manages the Dallas office of Howard Frazier Barker Elliott, Inc. Will frequently speaks and writes about the valuation of family-owned investment entities for Federal estate and gift tax purposes. He is a member of the Valuation Committee of the editorial board of Trusts & Estates magazine. His most recent work, Valuation Assurance Clauses appeared in the December, 2007 edition of Trusts & Estates. The Non-marketable Investment Company Evaluation Method, appeared in Valuation Strategiesin the November/December, 2006 edition. This article was a follow up to Quantitative Analysis of the Fair Market Value of an Interest in a Family Limited Partnership which appeared in that publication in 2005. The subject matter of these articles will appear as a chapter entitled, “Cost of Capital in Private Investment Companies” in the soon-to-be released third edition of Cost of Capital (edited by Pratt and Grabowski). In October, 2004, Will delivered a presentation and paper on the valuation of tiered partnerships (Its Turtles All the Way Down) at the ASA’s Advanced Business Valuation Conference. He is the co-author of the chapter on valuing family limited partnerships in the most recent edition of the Handbook for Advanced Business Valuation. His articles on the subject of business valuation for tax purposes have also been published by the Philip E. Heckerling Institute of Estate Planning (1999), The Journal of Business Valuation (1999), Valuation (1997), Shannon Pratt’s Business Valuation Update (1997), Estate Planning (1996), and Business Valuation Review (1989). Will is a member of the Business Valuation Committee of the ASA and currently serves as its secretary. He is also a member of the Government Relations committee of the ASA.
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Michael Paschall, ASA, CFA, JD Michael Paschall is a Managing Director of Banister Financial, Inc., a Charlotte, NC, business valuation firm. Paschall is an Accredited Senior Appraiser (ASA) in business valuation with the American Society of Appraisers and is a Chartered Financial Analyst (CFA). Paschall earned his undergraduate degree in English and economics from the University of North Carolina at Chapel Hill and his J.D. from the Wake Forest University School of Law. Paschall is co-author of the CCH Business Valuation Guide (ninth edition, 2007), co-editor of the quarterly CCH Business Valuation Alert, co-editor of Fair Value, and has written articles for a wide variety of publications, including such national publications as the American Journal of Family Law, Business Valuation Digest, Business Valuation Review, Judges & Lawyers Business Valuation Update, Shannon Pratt’s Business Valuation Update, The Valuation Compilation, and Valuation Strategies, as well as Family Forum and The Will and the Way, publications of the North Carolina Bar Association. Paschall has spoken on various business valuation topics to a number of different groups including the Advanced Business Valuation Conference of the American Society of Appraisers, the National Business Valuation Conference of the American Institute of Certified Public Accountants (AICPA), the National Trust Closely Held Business Association, and the American Academy of Matrimonial Lawyers. Paschall has also spoken at numerous continuing legal education seminars sponsored by the North Carolina Bar Association and is a regular lecturer in the Law and Valuation course offered by the Law and MBA Schools at Wake Forest University. Paschall is one of four Advisors nationwide to the American Society of Appraisers International Board of Examiners (Business Valuation Section). Paschall has been qualified as an expert witness in business valuation in various state court, binding arbitration, and mediation proceedings and has been retained on business valuation matters by the United States Department of Justice. |
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John Porter, JD John Porter is a partner at Baker Botts, LLP. Mr. Porter handles federal gift, estate, and income tax litigation and controversy work, including disputes and litigation with the Internal Revenue Service. He is nationally recognized for his expertise in representing taxpayers before and against the IRS in estate and gift tax controversies, especially those involving hard-to-value assets such as interests in family limited partnerships and limited liability companies. Mr. Porter has served as lead counsel for taxpayers in numerous cases in the United States Tax Court, the Court of Federal Claims, and United States District Courts and Courts of Appeals. He also has represented taxpayers in numerous other federal tax audits and administrative appeals. He frequently advises and represents fiduciaries and beneficiaries of trusts and estates with respect to administration and fiduciary duty issues. Mr. Porter is a Regent and a Fellow of the American College of Trust and Estate Counsel. |
 | CPE Credit Information Earn
2 Interactive CPE Credits (Consulting Services) |
Please note: To receive CPE credit, you must fill out the post conference survey. The survey link is e-mailed to participants along with the dial-in number and registration code, normally sent two or more days prior to the conference. CPE credit only registrants will be sent the survey link via e-mail.
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