Taxation on Property Transfers (IRC §1041)

The transfer of property that is not a gift is generally a taxable event requiring the transferor to recognize a gain or loss on the difference between its fair market value and adjusted basis. Prior to 1984, tax regulations required that appreciated property transferred to a non-transferor (receiving) spouse incident to a divorce result in…

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Intangible Assets (2 of 2)

In the first intangible assets article, we discussed the “economic phenomena” of intangible assets and the tests for its economic value and legal existence. These tests, if passed, may indicate the existence of identifiable intangible assets. Intangible assets have two general categories: real and personal property. Intangible real property includes fractional ownership interests in real…

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Law Practice Valuation

The value of a business is usually the present value of its expected future earnings. Price is what you negotiate. Value and price, therefore, are not always identical (as evidenced by the differences between asking and selling prices). Time and timing, for instance, are factors affecting price. It takes time to sell a business and…

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Royalties

Royalties for licensing intellectual property (IP) such as patents and trademarks are paid to licensors by licensees. The licensors, among other reasons, enter into licensing agreements when they do not have the capital to commercially exploit their patents. In exchange for licensors substantially conveying the rights to their patent, the licensees usually agree to exclusively…

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Business Valuation FAQs

Are valuations really necessary? A valuation of a business entity or ownership interest, though recommended in many circumstances, may not always be necessary. If it is necessary, a valuation analyst may not have to perform the valuation. If a taxpayer, however, performs the valuation in a tax-favored transaction and either understates or overstates the value…

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Do You Own a Business or a Salary?

Are you selling your business?  Do you own a business or just a salary? In economics, a business (also called firm or enterprise) is a legally recognized organizational entity designed to provide goods or services to consumers. However, the economic definition is based only on legal recognition. If your business only provides you (as the…

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Fair Market Value or Fair Value?

State laws concerning family law generally define the standard of value for valuing marital property (the company or ownership interest) in a marital dissolution or divorce. The family law courts have generally used either the fair market value (FMV) or fair value as the standard of value, each with their own (and sometimes contradictory) definitions,…

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