"Insights on Valuation"
The latest issue of our “Insights on Valuation” newsletter is now available. Arxis Financial, Inc. is pleased to provide this highly respected, nationwide publication which features valuable information that is applicable to many litigation matters. Topics in this issue include:
• What you need to know about IRS Code Section 409A: Section 409A applies to compensation that workers earn in one year, but that is paid in a future year. This is referred to as nonqualified deferred compensation. This is different from deferred compensation in the form of elective deferrals to qualified plans (such as a 401(k) plan) or to a 403(b) or 457(b) plan. Companies granting common stock options must set the strike price at or above fair market value on the date of the grant. This is true whether the company is publicly traded or privately held.
• IRS: Discount for Lack of Marketability developments: One of the most subjective areas of a Fair Market Value business valuation is the discount for lack of marketability (DLOM). The discount is used to estimate the effect on the value of a business that results from the inability to readily convert the shares of stock into cash.
• What role does Personal Goodwill play in your business?: Personal goodwill is an important concept in tax planning for the sale of a business and for the marital division of assets in many states. This article discusses how to determine to what extent the corporation or the individual controls the goodwill associated with a business, the value of the agreements which restrict the individual, and the values of personal and corporate goodwill.
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