The valuation of a business interest can be key in proper estate planning, including in the application of the 21-year deemed disposition rules. This presentation will provide an overview of issues facing the valuation of a business interest held by a trust in the context of a recent case, Ozerdinc Family Trust No. 2[1]. The court addressed a number of valuation, tax and litigation matters, including:

• Definition of fair market value
• Use of audited vs. internal financial statements
• Use of hindsight information
• Valuation of preferred shares
• Illiquidity and lack of marketability
• Treatment of shareholders’ advances in arriving at equity value
• Whether to consider embedded or latent income taxes in valuing a holding company
• Treatment of refundable dividend tax on hand (RDTOH)
• Applicability of minority discounts
• Control premium
• Family control
• Code of conduct for expert witnesses regarding independence and impartiality
• Fiduciary duties of the trustees

Join Catherine Tremblay (Partner, MNP LLP) as she provides an overview of the case facts and provides some general discussion points and valuation concepts  in light of the issues of the case.

[1] M. Kathleen Grimes and M. Ersin Ozerdinc. Trustees of the Ozerdinc Family Trust No. 2 v. Her Majesty the Queen, 2016 TCC 280.

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