S Corporations

Valuation of Subchapter S corporations has been the subject of a significant amount of debate in recent years.  The debate has been the result of undue complexity and protracted discussions over perceived (as opposed to real) differences among the varying financial models available to value S corporations.  The lack of clear guidance has lead to varied presentations in tax court, resulting in five 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, with disparate results. 

We have been at the forefront of the national discussion attempting to educate the profession, helping to formulate and simplify the financial models for the valuation of these complex entities.  We have spent the last several years teaching and writing about this topic extensively.  Our current text, published in November 2007, Fannon’s Comprehensive Guide to the Valuation of Subchapter S Corporations, clarifies much of the debate and provides guidance on the issues that affect the valuation of these entities. 

Our most recent publications and presentations can be found by clicking the links on this page.

Articles and Materials:

Fannon’s Comprehensive Guide to the Valuation of Subchapter S Corporations

Subchapter S Corporation Valuation—A Simplified View

S Corporation Valuation—2008 Update

Response to Business Valuation Review Article: Vol. 27, no. 4

Power-Point Presentations:

Valuation of Subchapter S Corps—2008 Update