Last week, the Supreme Court of Mississippi released its ruling in the case of Lewis v. Lewis. The Lewises owned a real estate development enterprise that, upon distributtion of assets, was awarded to Mr. Lewis. No formal business valuation was performed on Legacy. Upon appeal, the appellate court ruled that Legacy must be re-valued at fair market value including goodwill. The Supreme Court upheld the requirement to have Legacy valued at fair market value; but, consistent with the Singley, Watson, and Yelverton cases, fair market value is to exclude goodwill.
Based on the Lewis ruling and consistent with my rendering of the Singley ruling, I believe that the Court's definition of goodwill extends to what accounts call intangible assets. Intangible assets include, but are not limited to, workforce in place, customer base, patient charts, patents, and trademarks.
In divorce proceedings, a caveat remains in situations where alimony is awarded. In cases where alimony is involved, due consideration needs to be given to the level of compensation and /or income that is being used as the basis for the amount and duration of the alimony. If the alimony is based on compensation that exceeds fair market value, goodwill has constructively been divided.
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