In this feature article for the Nebraska CPA, we examine a pivotal ruling by the Eighth Circuit Court of Appeals that impacts the valuation of closely held businesses, particularly regarding company-owned life insurance (COLI) proceeds. In Connelly v. United States, the court decided that life insurance proceeds received after a shareholder's death must be considered a corporate asset when valuing the shares of the deceased shareholder's estate, diverging from prior rulings by the Ninth and Eleventh Circuits. Additionally, the court found that the company's buy-sell agreement did not establish a binding value for estate tax purposes due to its non-fixed nature. The case illustrates the importance of thoughtful succession planning and key considerations when using COLI to help finance buyouts. The Supreme Court of the United States (SCOTUS) agreed to hear oral arguments on the dispute on March 27, 2024, and our team will provide an update in a subsequent issue.

For an in-depth analysis and detailed planning considerations, read the full piece at the link below. 

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