Estate of Adell – Business value excludes son’s personal goodwill

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Abstract: The issue of personal goodwill is most often associated with business valuations prepared for marital dissolutions. But it can also become a key issue in estate tax valuations. This article examines one recent U.S. Tax Court decision involving a father who owned a satellite uplinking company and transferred his interest in it to a trust for the benefit of his three children. When he died and the IRS challenged the estate tax return, the Tax Court found itself addressing the issue of whether the son’s personal goodwill should be excluded from the value of the business in the gross estate. Estate of Franklin Z. Adell, T.C. Memo. 2014-155, Aug. 4, 2014