When Judge Travis A. (“Tag”) Greaves tells us that these words apply to the business situation he confronts in Kaleb J. Pierce, T.C. Memo. 2025-29, filed 4/7/25, I expect something more than the usual valuation joust.

But that’s what we get. Kaleb and spouse ran a cut-rate baby supply Sub S with a dubious business model, until Kaleb’s affair with a former employee set him up for blackmail. Whereupon he called in the FBI. So he and soon-to-be-ex-spouse had to split the Sub S and gift away substantial pieces.

Judge Tag Greaves goes for Kaleb’s expert’s valuation, ignoring an earlier valuation not because it was offered in settlement (FRE 408) but because the later version was better. IRS’ expert gets NPV discounts for present ops and terminal value; Kaleb’s expert didn’t substantiate company-specific risk adjustment to weighted cost of capital.

Tax-affected discount is back, but only just. Both sides’ experts agree that a willing buyer would take tax affect as a factor in pricing the deal, and that the Delaware Chancery is the right method to compute it.  All they disagree about is the number, and even then, they differ in assumed tax rate by a big 0.4%. “We emphasize that while we apply tax affecting here, given the unique setting at hand, we are not necessarily holding that tax affecting is always, or even often, a proper consideration for valuing an S corporation.” T. C. Memo. 2025-29, at p. 37.

At the end, nothing beyond a review of business valuation here.