VALUATION OF A MEMBERSHIP INTEREST

January 19, 2021

The article cited below will be of interest to many LLC lawyers, members and others.  I’ve also set forth below the first paragraph of the article.

22 Transactions: Tenn. J. Bus. L. 170
Transactions: The Tennessee Journal of Business Law
Fall, 2020
Case Commentary
Issam Bahour
Copyright © 2020 by Transactions: The Tennessee Journal of Business Law, Inc.; Issam Bahour

LLCS–VALUATION OF MEMBERSHIP INTEREST IN LIMITED LIABILITY COMPANIES

The Tennessee Court of Appeals held that, in the context of Tenn. Code Ann. § 48-249-505-506, (1) “fair value” is determined by the member’s proportionate interest in the company as a going concern, and is distinguished from “fair market value”, which consists of the price at which property would change hands between a willing buyer and a willing seller; (2) discounts for lack of control and marketability are not necessary for appraising a membership interest; and (3) tax affecting is relevant in assisting the court’s determination of the fair value of the going concern value of an S corporation. Raley v. Brinkman, No. M2018-02022-COA-R3-CV, 2020 Tenn. App. LEXIS 341 (Tenn. Ct. App. July 30, 2020).

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