Week 8 Research Project

Week 8 Research Project - Week 8 Research Project One of...

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Week 8 Research Project One of the major concerns associated with closely held firms is the determination of their value. This uncertainty is largely due to the fact that shares of a closely held business are owned by a small number of stockholders, and often by members of a family. Because there is no established market for the shares, it is difficult to establish the value of the shares in an estate or gift tax situation. The criteria include the history of the business, economic outlook, book value, earning capacity, dividend-paying capacity, goodwill and other intangibles, past sales of company stock, and stock price of comparable businesses. One of the most controversial tax issues facing closely held corporations involves the compensation paid to employees who are also major stockholders. The controversy arises because employee compensation is a tax-deductible business expense for corporations, while payments made to stockholders in the form of dividends are not tax deductible. When the individuals making the compensation decisions are also stockholders, they may
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This note was uploaded on 03/18/2012 for the course BUS 414 taught by Professor Keller during the Spring '11 term at DeVry Arlington.

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Week 8 Research Project - Week 8 Research Project One of...

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