Opinion ID: 1172852
Heading Depth: 3
Heading Rank: 1

Heading: Did the Trial Court Err in Assigning a Value of $132,760 to Ronald's Interest in Data Management, Inc.?

Text: One spouse's interest in a close corporation, including the value of corporate goodwill, is property subject to division. Rostel v. Rostel, 622 P.2d 429, 430 (Alaska 1981). The problem is therefore fixing the value of Ronald's interest in Data Management. The trial court found that Ronald's interest has a fair market value of $132,760, based on the testimony of Ronald's expert. We will not reverse the discretionary finding of the trial court unless it is clearly unjust. Merrill v. Merrill, 368 P.2d 546, 547 (Alaska 1962). Ronald's expert, William Kohler, a certified public accountant, based his valuation of Ronald's business interest on his intimate knowledge of the business, using a formula developed by the New Jersey Supreme Court in Dugan v. Dugan, 457 A.2d 1 (N.J. 1983). Dugan involved valuation of goodwill in an attorney's exclusively owned professional corporation. [1] In contrast, Susan's expert, Paul C. Taylor, Associate Professor of Finance at the University of Alaska, used guidelines established by the Internal Revenue Service for determining the value of stock in a closely held corporation for estate tax purposes to conclude that the fair market value of the business interest was $766,000. [2] The trial court specifically rejected Mr. Taylor's valuation and accepted that of Mr. Kohler. Since the trial court's finding was supported by Mr. Kohler's testimony, we are not left with a definite and firm conviction that a mistake was made. We therefore affirm the superior court's finding that Ronald's interest is worth $132,760. [3] Susan also argues that Ronald should be required to make a lump sum buyout of her 30% interest in the business or give her a security interest to ensure his periodic payments. See Jones v. Jones, 666 P.2d 1031 (Alaska 1983). The form of a buyout is a determination based on all the facts, and we find no abuse of discretion in the 3-year payout period at 10.5% interest.