A recent Supreme Court decision in Connelly vs. United States has major implications for how redemption obligations are treated in the valuation of privately held business interests, particularly in the context of estate taxes.

In this new article, Chuck Faunce, Director of Business Valuation and Litigation Services at Gorfine, Schiller & Gardyn, explains why traditional approaches to valuing redeemable equity may no longer hold up, and what business owners need to know.

Key Takeaways from the Article:

• Why redemption obligations should be treated as temporary equity, not liabilities.
• How life insurance-funded redemptions affect a company’s total value.
• What the Connelly decision means for estate tax calculations.
• The risks of mischaracterizing redemption features, and how it can distort valuations.
• Practical considerations for business owners and their advisors moving forward.

Whether you’re a business owner, estate planner, or financial advisor, this article provides essential context on how to accurately reflect the economic impact of redemption obligations and prepare for potential tax exposure.

If you have any questions, contact our Business Valuation and Litigation Services team today.