Business Valuations Court Case Reviews

Introduction to the Posts

These reviews are thoughts and comments on consequential court cases, from the perspective of a Chartered Business Valuator, Commercial Real Estate Appraiser, and entrepreneur. The intended audience is legal professionals and all those who take interest in the financial perspective on court cases. We hope you enjoy our thoughts and analysis. Once we’ve made some headway on this project, we’ll open this up for comments.

Edie v Edie, 2003, ABQB 70 (CanLII), Issues: Guideline Income, Matrimonial Property, the Golden Goose, and the Availability of Corporate Income. CanLII Case Link: Here – Edie v Edie, 2003, ABQB 70

Edie v Edie hits close to home in a variety of ways for this writer. The Edies were parents to one of my business partners, Chad Edie with Frost Valuations. Further, many of the real properties owned by Mr. Edie (Le Marchand Mansion being one of them) are close to my downtown-Edmonton home, and are tenanted by a number of long-time clients. So to say it’s familiar is quite accurate. Further, the preparation of Guideline Income reports has been a sizable portion of my practice over the past eight years, and it’s an an area that I feel I’m more avant-garde than most practitioners.

Edie v Edie, 2003, ABQB 70 answers two questions on Guideline Income that are of interest to preparers of Guideline Income Reports:

First: How is it, that cash “sitting” in a company, not considered available for use?

Second: What is a legitimate business interest that would allow cash to “sit” in a company?

The second question more or less answers the first, in that, cash is allowed to accrue in a company, without being considered as available for income, if that cash serves a legitimate business interest. That’s a fairly short trip on the first question; however, answering the second question is a much longer, and most would agree, never ending journey.

The first step (sort of) is to determine what the financial needs of the business are, for which you first have to know, what the goals of the business are, and whether or not those goals are legitimate or simply a method of not showing available income. As mentioned – this is long road, and we’ll pick up where we left off next time.

See you next week.

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DDD

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TR

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