Business Valuation Engagements


We provide business valuations under the guidelines of Statement on Standards for Valuation Services No. 1 (SSVS 1). This statement became effective on January 1, 2008, and provides standards that must be followed by all CPAs involved in business valuation engagements.

SSVS No. 1. defines identification standards, methods, and characteristics of business valuations; business valuation models and approaches; the types of engagements and conditions that must comply with this standard; how to determine the data and analysis needed for a business valuation; valuation approaches, adjustments, and subsequent events; reviews valuation or calculation engagement documentation requirements; identifies required items to include in a valuation or calculation report, discloses assumptions and limiting conditions; reviews Interpretation No. 1-01 and the scope of this standard; reviews and analyzes the importance of IRS and Court rulings.

Some of the Valuation methods we may use include:

The Adjusted Net Assets Method – This method is an asset-based approach to business valuation whereby the company’s assets and liabilities are adjusted to their current fair market value. An asset-based approach is an excellent example of what is known as the “economic substitution principle.”, which states that no one would be willing to pay more for an asset than the price to obtain a substitute asset. Thus the asset approach presents a net value of all the company’s tangible and intangible assets and its liabilities. We determine the definitions of value and the factors to consider under IRS Revenue Rulings when establishing the value of a business. The value of certain assets such as property, plant and equipment are seldom the equivalent of book value and therefore generally require separate experts to provide appraisals for these items. When determining the value for land for example, the land should be valued separately from its improvements and should be valued at its highest and best use. We demonstrate when the adjusted net assets method should be used to value a business and how to value certain assets under this method, and identify when other asset-based approaches that may be more appropriate. Generally the asset approach is relied on when the business is an investment or holding company. It may also be used in the valuation of a small businesses or professional practices where there is little or no goodwill. Some of the issues under the asset approach valuation are unrecorded assets and liabilities such as goodwill or intellectual property. We believe it is important to review the steps necessary with you when using this method, explain the necessary adjustments and discuss the pros and cons of this method over other methods. We also discuss with you how the courts view this valuation method.

The Income Approach – This is another method used to value businesses and is probably the most widely used approach in business valuation. This approach is based on the theory that an investor will require an investment to yield a return sufficient to recover the initial cost of the investment, as well as provide a return sufficient to compensate for the perceived risk of that investment. In other words, the higher the perceived risk, the higher the expected return required to attract potential investors. This return comes in the form of future earnings. It is reasonable to assume that the actual or expected earnings and/or cash flows of a business are critical components when determining a value for such an organization. We review the foundation of this method as discussed in Revenue Ruling 59-60 and other subsequent Revenue Rulings. We review with you the capitalization of earnings, capitalized cash flow, excess cash flow and the discounted earnings methods. Each of these methods requires the determination of a future benefit stream and a rate of return or risk that the projected future economic benefits will actually be received. We review the pros and cons of the income approach itself. We discuss the theory behind the income approach valuation methods of business valuation such as the conversion of anticipated economic benefits into a present single amount and identify the importance of certain Revenue Rulings for this business valuation method. In the process of developing this information, we collect and review historical financial data and make normalizing adjustments. We discuss the strengths and weaknesses of this approach with you and identify an appropriate benefit stream and discuss how we develop normalized earnings and calculate projected future earnings. We carefully explain and review the steps in this method in order to ensure you fully understand how this may impact your business valuation.

The Excess Earnings (Treasury) Method – This is another method used to value businesses. We look at the foundation of this method as discussed in Revenue Rulings and court cases. We review with you how to apply this method and how it combines an asset-based method with an income-based method of valuation. We identify and carefully explain and review the steps in this method to ensure you fully understand how this may impact your business valuation.

The Normalization of Earnings – This is an important step in the business valuation process. Many companies subject to business valuations are smaller, closely held companies. It is not unusual for such organizations to treat various financial items differently than the publicly held companies chosen as comparables. Thus, earnings often need to be normalized in order to make an effective comparison. Even when market or income business-valuation approaches are used, normalization adjustments are frequently needed for the financial statements of closely held companies. Required adjustments are addressed in detail with the client.

The Market Approach – This is another method used to value businesses. A market approach determines a value of a business interest using methods that compare your business to similar businesses that have been sold. The theory is the value of a business can be determined by comparing it to the sale of another similar business. This valuation method is preferred by the IRS and courts, so a search for comparables should be performed, though it can be difficult, and often impossible, to find useful comparables. This method is used real estate appraisers. However, real estate appraisers, have a much easier time finding comparables from which to choose from as homes have similar qualities such as size and location. It is much more difficult for a business valuation professional to find comparables for business being valued. Generally market transactions in businesses, business ownership interests or securities can provide objective data for developing value measures to apply in business valuations. Such measures are frequently derived from “guideline companies.” Guideline companies are companies that provide a reasonable basis for comparison to the relative investment characteristics of the company being valued. A comparable company has been defined as one which has reasonable and justifiable similarity to the business that is being valued. The issue of reasonable similarity has been addressed in many court cases. Two of which come to mind are Tallichet v. Commissioner, 33 TCM 1133 (1974), which stated that there are “guideposts in determining comparability.”, and Estate of Victor B. Clarke where it was stated “it is imperative that the characteristics of the subject company and the purported comparable company relevant to the question of value be isolated and examined so that significant comparison can be made.”

Let Tax Client Services help you with any business valuation needs!

Dirk Wierema


“As the Corporate Controller at Ampro Computers, I hired James to prepare and update four years of amended corporate Federal and State tax returns. While on this project James expertise in Federal and State taxes helped to defer a significant tax liability for our company. James was very easy to work with and took the time to explain complex tax regulations in a way that was easy to understand. I would highly recommend James.”

Controller – Zetta, Inc.

2014-05-14T12:15:06+00:00
“As the Corporate Controller at Ampro Computers, I hired James to prepare and update four years of amended corporate Federal and State tax returns. While on this project James expertise in Federal and State taxes helped to defer a significant tax liability for our company. James was very easy to work with and took the time to explain complex tax regulations in a way that was easy to understand. I would highly recommend James.” Controller – Zetta, Inc.

Silina Dudkina

I have great respect for James and his firm Tax Client Services. He is personable, trustworthy and frankly brilliant in his field. His tax and accounting experience, knowledge and ethical character are of the highest standards. He has the ability to focus on key tax issues that make a difference that is rarely seen these days. Its hard to find a CPA who is highly competent, who you can trust, and one that will not over-charge you! His many strengths include how determined and focused he is in taking care of his clients tax and accounting problems. James is a polished and experienced tax professional, one whom you can count on to go the extra mile and who will do everything possible to ensure his clients pay the absolute minimal amount of taxes possible. I highly recommend this tax professional!

Studying to be a Nurse

2014-05-14T12:09:40+00:00
I have great respect for James and his firm Tax Client Services. He is personable, trustworthy and frankly brilliant in his field. His tax and accounting experience, knowledge and ethical character are of the highest standards. He has the ability to focus on key tax issues that make a difference that is rarely seen these days. Its hard to find a CPA who is highly competent, who you can trust, and one that will not over-charge you! His many strengths include how determined and focused he is in taking care of his clients tax and accounting problems. James is a polished and experienced tax professional, one whom you can count on to go the extra mile and who will do everything possible to ensure his clients pay the absolute minimal amount of taxes possible. I highly recommend this tax professional! Studying to be a Nurse

Benny Lee


“A person’s expertise can be differentiated in terms of the following classes: Novice, Beginner, Intermediate, Expert, and World-Class Guru.
My observation of Jim’s practice and understanding of all tax intricacies both from corporate and individual would place him in the class of a World-Class Guru.”

Vice President, Information Technology – East West Bank

2014-05-14T12:01:56+00:00
“A person’s expertise can be differentiated in terms of the following classes: Novice, Beginner, Intermediate, Expert, and World-Class Guru. My observation of Jim’s practice and understanding of all tax intricacies both from corporate and individual would place him in the class of a World-Class Guru.” Vice President, Information Technology – East West Bank

Mona Sheung


“James is a very hard working and diligent, someone I respect and trust!"

ControllerClient Service Manager at FIOH Global Asset Management and Strategies, LLC

2014-05-14T12:21:25+00:00
“James is a very hard working and diligent, someone I respect and trust!" ControllerClient Service Manager at FIOH Global Asset Management and Strategies, LLC

Pat Powers


“James identified a difficult and complex tax issue that required resolution. This particular issue was unusual and potentially quite troublesome. James supervised analysis and resolution of this issue in a very professional manner. His handling of the issue demonstrated a very good grasp of highly complex legal issues balanced by sound and mature judgment.”

Tax Partner at Baker & McKenzie

2014-05-14T12:05:55+00:00
“James identified a difficult and complex tax issue that required resolution. This particular issue was unusual and potentially quite troublesome. James supervised analysis and resolution of this issue in a very professional manner. His handling of the issue demonstrated a very good grasp of highly complex legal issues balanced by sound and mature judgment.” Tax Partner at Baker & McKenzie

George Baker


“James was hired because of his outstanding tax expertise. He worked on tax issues related to financial statement documents backing the bank’s submission of its 10-K, 10-Q and other SEC submissions. He was responsible for tax compliance and filings for a $6 Billion market cap company. His knowledge of the tax law led to substantial savings for the bank. One example was the bank’s foreign earnings repatriation strategy–$8 million in federal taxes were saved as well as some $2 million in state taxes. James is a master at sorting through details on tax issues and used this to reach correct tax applications to the benefit of the bank.”

Senior Vice President at Zions Bank

2014-05-14T12:04:36+00:00
“James was hired because of his outstanding tax expertise. He worked on tax issues related to financial statement documents backing the bank’s submission of its 10-K, 10-Q and other SEC submissions. He was responsible for tax compliance and filings for a $6 Billion market cap company. His knowledge of the tax law led to substantial savings for the bank. One example was the bank’s foreign earnings repatriation strategy–$8 million in federal taxes were saved as well as some $2 million in state taxes. James is a master at sorting through details on tax issues and used this to reach correct tax applications to the benefit of the bank.” Senior Vice President at Zions Bank

Raffaele Mari


“James is a seasoned tax professional who has excellent technical and communication skills. He is a quick study and focuses on providing value-added services. He is a team player who is willing to do whatever it takes to deliver results in a cost-effective manner. I have enjoyed the opportunity to work with James and am confident that anyone would be very satisfied with his work.”

Managing Director, Global Wealth Management

2014-05-14T12:12:00+00:00
“James is a seasoned tax professional who has excellent technical and communication skills. He is a quick study and focuses on providing value-added services. He is a team player who is willing to do whatever it takes to deliver results in a cost-effective manner. I have enjoyed the opportunity to work with James and am confident that anyone would be very satisfied with his work.” Managing Director, Global Wealth Management

Howard Chen


“Jim has strong technical skills in the tax field. He is very independent and hard working. Jim gets the job done!”

VP, Corporate Development and Strategy at Bank of the West

2014-05-14T12:14:08+00:00
“Jim has strong technical skills in the tax field. He is very independent and hard working. Jim gets the job done!” VP, Corporate Development and Strategy at Bank of the West

Juan Carlos Villalobos


“I contacted James Duffy at Tax Client Services to have him prepare the financial statements and tax returns for Aapex Financial Solutions, LLC. He did a great job preparing my friend’s tax return, significantly reducing their tax liability. They were impressed on how detailed he was as he looked at all of the tax planning techniques allowed under the tax law. My friends liked that he looks at your prior year tax returns to determine if there are any missed tax deductions without any up-front charge. He then found a lot of tax savings! With that background I had no issues asking for his assistance on this project. He helped me on issues with the California Residential Mortgage division, the US department of HUD, reviewed my prior year financial statements and tax returns, etc. He identified important issues in the prior and current year tax returns. It is a given that I will continue with his services. He is a very accomplished professional and a pleasure to work with. I highly recommend Tax Client Services!”

President at Aapex Financial Solutions, LLC

2014-05-14T12:10:46+00:00
“I contacted James Duffy at Tax Client Services to have him prepare the financial statements and tax returns for Aapex Financial Solutions, LLC. He did a great job preparing my friend’s tax return, significantly reducing their tax liability. They were impressed on how detailed he was as he looked at all of the tax planning techniques allowed under the tax law. My friends liked that he looks at your prior year tax returns to determine if there are any missed tax deductions without any up-front charge. He then found a lot of tax savings! With that background I had no issues asking for his assistance on this project. He helped me on issues with the California Residential Mortgage division, the US department of HUD, reviewed my prior year financial statements and tax returns, etc. He identified important issues in the prior and current year tax returns. It is a given that I will continue with his services. He is a very accomplished professional and a pleasure to work with. I highly recommend Tax Client Services!” President at Aapex Financial Solutions, LLC

Blake Christian


“James hired our firm to evaluate UCB’s California Enterprise Zone Credits. James proved to be a highly technical, high quality, tax executive and was very helpful in managing a complex, multi-year, project. With James assistance, we were able to jointly identify over $6M of supplemental tax savings for his bank.”
Tax Partner, HCVT LLP

2014-05-14T11:57:59+00:00
“James hired our firm to evaluate UCB’s California Enterprise Zone Credits. James proved to be a highly technical, high quality, tax executive and was very helpful in managing a complex, multi-year, project. With James assistance, we were able to jointly identify over $6M of supplemental tax savings for his bank.” Tax Partner, HCVT LLP

Irina Butorina



“James has been helping me with my taxes since 2010 and I am happy about how effective his solutions are and most important – I am very happy with the money he saves for me. His ability to focus on taxes like nobody I have ever seen is actually amazing. He asks a lot of questions always looking for ways to lower my taxes. Don’t be surprised to get detailed emails discussing your issues without any charge on his part at odd hours of the day or night. He cares about his work and I have been always amazed at how he comes up with tax ideas that really work and are legal which is a very important thing for me. He is friendly and fast thinking and returns your phone call promptly, is easy to reach, and will make sure you pay the least amount of taxes possible. He is a God sent tax geek and I would highly recommend James to anyone of my friends.”
Doctor of Medicine

2014-05-14T12:16:15+00:00
“James has been helping me with my taxes since 2010 and I am happy about how effective his solutions are and most important – I am very happy with the money he saves for me. His ability to focus on taxes like nobody I have ever seen is actually amazing. He asks a lot of questions always looking for ways to lower my taxes. Don’t be surprised to get detailed emails discussing your issues without any charge on his part at odd hours of the day or night. He cares about his work and I have been always amazed at how he comes up with tax ideas that really work and are legal which is a very important thing for me. He is friendly and fast thinking and returns your phone call promptly, is easy to reach, and will make sure you pay the least amount of taxes possible. He is a God sent tax geek and I would highly recommend James to anyone of my friends.” Doctor of Medicine

Wesley Wakeford


“James Duffy has advised me on several tax matters. I give him my highest recommendation for his knowledge of tax law, for having the highest integrity and also for being a true gentleman. James is a very sharp intellectual and is also a very creative professional. If you need tax help, you will not go wrong with James Duffy.”

Attorney

2014-05-14T12:07:08+00:00
“James Duffy has advised me on several tax matters. I give him my highest recommendation for his knowledge of tax law, for having the highest integrity and also for being a true gentleman. James is a very sharp intellectual and is also a very creative professional. If you need tax help, you will not go wrong with James Duffy.” Attorney

Mike Ford


“I’ve known James Duffy for over thirty years and rely on him for rock solid tax and accounting advice and the very latest in clever AND LEGITIMATE solutions to complex situations. I am very comfortable referring him to my associates and friends and know they will receive the same high standard of care he delivers to his national clients, and to me. He never fails to go the extra mile and has always been a proactive part of every situation I have dragged him into. While many consultants see clients as mere engagements his style is much more comprehensive and it’s not unusual at all to get an email from him at an odd hour treating the topic we’ve been kicking around. I am confident that he is the best of the best.”

Real Estate Professional

2014-05-16T05:01:37+00:00
“I’ve known James Duffy for over thirty years and rely on him for rock solid tax and accounting advice and the very latest in clever AND LEGITIMATE solutions to complex situations. I am very comfortable referring him to my associates and friends and know they will receive the same high standard of care he delivers to his national clients, and to me. He never fails to go the extra mile and has always been a proactive part of every situation I have dragged him into. While many consultants see clients as mere engagements his style is much more comprehensive and it’s not unusual at all to get an email from him at an odd hour treating the topic we’ve been kicking around. I am confident that he is the best of the best.” Real Estate Professional

Why TCS?

Tax Client Services (TCS) is dedicated to helping you with all of your tax and accounting needs, including maximizing your after-tax cash flow by minimizing your tax liability.

Experience

James was born in Seattle, Washington though he spent the greater portion of his early years in Hawaii. Completing his Bachelor of Economics from the University of Santa Barabar, James was hired by PricewaterhouseCoopers.

Selecting a Tax Professional

When you’re looking for a talented and skillful tax professional, the one thing you absolutely need is to select someone who is well versed in tax law. Not requiring this could cost you greatly in both lost cash flow and additional stress...