Financial Advisor’s Letter Can Be Evidence of Partnership Value

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

Smith v. Smith –  Partnership can be valued based on claimed value and tax return for Tennessee divorce.

John Armistead Smith and Marian Krause Smith were married in 1958 and separated in 1990.  Mrs. Smith filed for divorce in 1991 on the grounds of irreconcilable differences and inappropriate marital conduct.  She subsequently amended the complaint and alleged adultery.

Mr. Smith was the Vice-Chairman of Union Planters Corporation and President of the Regional Banking Group.  Mrs. Smith had a B.A. degree from the University of Wisconsin, but didn’t work outside the home during the marriage.

One issue in the case was the value of the South Highland Limited Partnership.  The opinion of the Court of Appeals does not describe the nature of this partnership’s business.  The trial court valued the limited partnership at $45,000 and awarded it to Mr. Smith.  Mr. Smith testified that the partnership had no value based on “tax law,” but presented no expert testimony.  Mrs. Smith presented the testimony of David Cuicchi.  Mr. Cuicchi was a Certified Public Accountant and partner with Cannon & Company.  He testified that the partnership was worth $45,000 based on the partnership’s tax returns and a 1989 letter written by Mr. Smith’s financial adviser placing the value at that amount.  He further testified that there had been no tax law changes that would have affected that value.

The Court of Appeals affirmed the trial court’s finding.  It noted that there is a presumption of correctness of trial court factual findings.  Furthermore, it noted that the trial court had the opportunity to observe the witnesses and evaluate their demeanor.  Because of the evidence introduced at trial, the Court of Appeals was unable to say that the record preponderated against the trial court’s finding.

912 S.W.2d 155 (Tenn. Ct. App. 1995).

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 the Nashville area. Contact Us today at (901) 683-1850.