In a U.S. Tax Court case, the primary issue was twofold: 1) the valuation of a closely held business for estate tax reporting purposes; and 2) the value implications of the personal goodwill of a key employee of two related companies. In a notice of deficiency, the Internal Revenue Service determined a federal estate tax deficiency of nearly $40 million and claimed estate tax valuation understatement penalties exceeding $15 million.
Stout prepared a valuation report presenting the value of the decedent’s interest in a cable uplink services company for the purpose of filing the estate’s tax return. This report was submitted to the Tax Court, and our expert was retained by the taxpayer to testify at trial.
The Tax Court found Stout’s valuation report to be the most persuasive and relied on it exclusively in reaching its decision. The court held that the estate was not liable for any tax deficiency or penalties.