CPA Certified in Business Valuations
The community divides the business that appreciated during marriage based on a valuation. They use experts when they do not agree. However, experts have different and sometimes controversial opinions. Basically, the value of a thing is the price it will bring. Let's say you are selling your house. If you overprice it, then you will not attract buyers. Conversely, if you underprice your house, then you will attract everybody. A fairly priced house will attract a market of buyers. The market depends on the local economy and the demand for your house. A business, like a house, must be valued fairly.
Divorce Business Valuation in LA & OC
Valuing a business is not an exact science. Its fair value is based on profits, growth and risk. The expert should use all the relevant facts weighed by informed judgment, common sense and reasonableness. Experts often use the capitalized excess earnings method to value a business. There are other methods. Unreported income and personal expenses paid for and deducted by the business lowers its profit. Lower profit means lower value. Therefore, the true profit of a business must be determined before it can be valued.
Property Division: Alternate Valuation Date
A business acquired during marriage is generally community property. So, you need its value as of the date of trial. You can use the date of separation or an alternate valuation date but ask your divorce attorney. If the business is separate property, then you need its value as of the date of marriage. You also need its value as of the date of trial or an alternate date.
Family Law: Pereira Van Camp
The most common case law specific to dividing a separate property business is Pereira Van Camp. Most separate property businesses are acquired before marriage. The Marriages of Pereira and Van Camp are two distinguishable cases but are often referred as one. They are only relevant if the business appreciated during marriage. You use Pereira to apportion the separate property wherein the residual is community property. On the other hand, you use Van Camp to apportion the community property wherein the residual is separate property.