BP results - header image

July 2009 - Vol 1, Issue 11

Greetings!

BP results is an e-newsletter for industry professionals who provide vital financial and legal services for our mutual clients. So that you may identify similar opportunities in your practice we are sharing with you recent successes we've had with our clients.
In This Issue
How Business Owners Can Save Tax Dollars in Today's Economy
Calculating Lost Profits
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State and Local Tax Services
425.289.7609
 
Allan Vander Hamm
Business Valuation and Transition Services
425.289.7613
 
Forensic, Litigation and Investigation Services
425.289.7617
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How Business Owners Can Save Tax Dollars in Today's Economy
 
An attorney called us to prepare a business valuation. The business owned and operated commercial real estate as a limited liability company. His client wanted to transfer a minority interest in his business to an heir. He hoped to lower his estate tax liability with proper legal planning and implementation.

Result #1: We prepared a well-documented and defensible business valuation report for inclusion with IRS Form 709, United States Gift (and Generation Skipping Transfer) Tax Return. The timing of this gift provided significant benefits. Because of the economic decline and the weakened commercial real estate market in the Puget Sound region, the appraised value of the real estate was 40% lower than the appraised value from only 18 months prior. Lowered values are also reflected in many operating businesses at this time.
 
In addition, the combined adjustments to fair market value for discounts for lack of control and lack of marketability reduced the value of the gifted interest by over 45% from pro-rata value.
 
We are an economic period where there are great opportunities to save tax dollars while controlling how estates are managed and distributed. This opportunity may not last long though, so now is the time to call us or your attorney to benefit.
 
We work with numerous estate planning attorneys and other professionals to match their expertise and personalities with our clients' styles and goals. Please call Allan Vander Hamm at 425 454-7990 to learn more about the business transition and valuation process.
Calculating Lost Profits
 
Berntson Porter is pleased to have assisted legal counsel with the calculation of lost profits. An owner of a mid-sized business had recently purchased a larger building to accommodate the growth of the business. A few weeks after relocating his company to the new building, water started leaking from the ceiling. After inspection of the leaks, it was determined that the building was not up to code and needed significant construction to fix the problems. Due to the severity of the leaks, the time required to obtain permits and other issues, the owner had to move out of the building for almost one year. The owner filed a lawsuit against the seller of the building to recover damages.
 
Result #2: Based on our analysis of the historical financial information, we efficiently calculated both past and future lost profits. The future lost profits were converted to a present value amount using an appropriate discount rate. We submitted our calculations in an expert report which was used to successfully settle the case.
 
For more information contact Douglas McDaniel, Director of Forensic, Litigation and Investigation Services to learn more at dmcdaniel@bpcpa.com or 425.289.7617.
 
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