Trapped-in gains: To discount or not to discount?
Abstract: When valuing a C corporation, a key issue is often whether it’s appropriate to apply a discount for trapped-in capital gains, even when a sale of the business (or its highly appreciated assets) isn’t imminent. This article summarizes a recent Louisiana Court of Appeals case that addresses when a discount may be appropriate — and explains why it was inappropriate in this case. Shop Rite, Inc. v. Gardiner, No. 21-0371 (La. App. Dec. 29, 2021).