Electrician Business Valued at $50K in TN Divorce

Tennessee business valuation law case summary – Electrician. Tennessee divorce and family law from the Tennessee Court of Appeals.

Warren v. Warren – Tennessee Divorce Business Valuation – Electrician

Alice and David Warren were married in 1998 and divorced in 2007.  Mr. Warren was a licensed electrician, and they operated Warren Electric as a family business.  Mrs. Warren held a contractor’s license, and had experience working with the electrical business.  The business earned gross receipts of over $530,000 in 2006 and $400,000 in 2007.  Warren Electric had equipment worth approximately $20,000.  They also operated another business, ALW Contractors.

The trial court valued Warren Electric at $50,000, and determined that ALW had no value.  The business was awarded to David, and Alice was awarded $30,000 for her share of the business and another property.

On appeal, Mrs. Warren argued that the trial court had erred, because it failed to take into consideration the value of Warren Electric as a going concern.  The Court of Appeals disagreed, because the value as a going concern was based largely upon Mr. Warren’s skill and workmanship as an electrician.  The parties’ accountant, who had done their taxes, testified that the business would be worth nothing if awarded to Mrs. Warren, but would continue to make several hundred thousand dollars per year if awarded to Mr. Warren.

For these reasons, the Court of Appeals affirmed the trial court’s valuation.

No. M2009-00042-COA-R3-CV (Tenn.Ct. App. Mar. 3, 2010).

See original opinion for exact language. Legal citations omitted.

To learn more about Tennessee business valuation law, see Business Valuation in Tennessee Divorce Law. To learn more about the division and valuation of professional practices in divorce, see When Professionals Divorce in Tennessee: Valuing Professional Practices.

Miles Mason, Sr. JD, CPA handles complex divorce matters including business valuations and forensic accounting issues. View his professional biography listing books and articles published on business valuation and forensic accounting and seminars presented to lawyers, judges, business valuation experts, and forensic accountants. Miles Mason, Sr. authored The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers, published by the American Bar Association. The Miles Mason Family Law Group, PLC’s offices are located in Memphis, Tennessee and serves West Tennessee and Nashville. Contact Us today at (901) 683-1850.