Valuation of Subchapter S corporations has been the subject of a significant amount of debate in recent years. This is one of the most controversial areas in business valuation today.
The debate has been the result of the complexity of perceived differences among the varying and evolving financial models available to value S corporations. The lack of clear guidance has led to varied presentations in tax court, resulting in many cases with decisions that are not supported by financial and economic reality. The methods used by the tax court can lead to significant over-valuation if applied to other S corporations. The issue has now expanded into divorce courts and courts of equity.
The use of a credentialed business valuation expert to navigate these murky waters is an absolute necessity.