Thoughts and Insights by Michael Gregory

Business valuers, the IRS, and conflict resolution – Part 4 S-Corp issues

This is the fourth in a series of six monthly technical blogs on issues related to business valuation. Many business valuers believe that all entities whether a C-corp that is taxed or an S-corp that pays no federal income taxes should both be valued as if they pay tax (Grabowski, Mercer, Van Vleet)[i]. These business valuers believe there is no difference in the determination of fair market value. Others believe there is an S-corp adjustment to be made, but it should not be fully taxed (Fannon, Treharne)[ii]. These approaches suggest a premium for an S-corp. In general, the IRS believes that an S-corp should not be tax affected since it does not pay federal income taxes. This article looks at this issue in general. For a more complete analysis of this topic see original commentary dated Valuing Interests in S Corps (2013) or an updated and more comprehensive commentary within Business Valuations and the IRS (2018).   [i] https://www.amazon.com/Business-Valuations-IRS-Michael-Gregory/dp/1945148020 (423-433 and 436-441)   [ii] https://www.amazon.com/Business-Valuations-IRS-Michael-Gregory/dp/1945148020 (419-423 and 433-435)  

What kinds of questions should good leaders ask to demonstrate listening actively?

In the book, The Collaboration Effect, is a chapter on listening actively. I believe the most important chapter in the book to address conflict, disputes, and collaboration is the chapter on listening actively. Associated with listening actively is the ability to ask good questions and good follow up questions. In the commentary that follows I offer some of the kinds of questions you may want to consider as a leader. Let me know what you think? I welcome your ideas too.

Why is collaborative leadership replacing top-down leadership?

In our complex world that is very interconnected leadership is increasingly moving from a top-down to a more collaborative approach overcoming conflicts and disputes more readily and earlier while improving productivity, morale, and customer satisfaction. This type of leadership tends to be encouraging, listening, and understanding. Leadership tends to be empathetic, focus on buy in, and being authentic. Collective leadership results in less rework, misunderstandings, and frustration as employees are aligned with their leadership. Because leadership is allowed to shift according to who has the expertise as various needs arise, everyone knows that depending on what is needed anyone may be called upon to share what they know, and everyone is encouraged to speak up.

Do you want to know how to promote collaboration with cooperative language?

In order to promote collaboration and to prevent conflicts and disputes have you ever considered the language you use to promote or not promote cooperation? This commentary explores some leadership techniques, neuroscience implications, and provides practical considerations to help you promote cooperation when working on collaborative tasks with others. It is possible to use language unintentionally that can cause friction inadvertently. Consideration of needs and feelings can go a long way to promote collaboration. Empathy may be your most significant tool in your tool box when enlisting others to collaborate with you

Promote collaboration – yes, but to much of a good thing is not helpful

Collaboration with others often leads to better outcomes with others supplying ideas, energy, and effort. However, your desire to be a team player, to help others, and to be there for others can lead to too much collaboration and burn out. It is ok to say “no.”  You can do this diplomatically. It is necessary to say “no” sometimes. Become aware of your triggers, apply diplomatic commentary to say “no,” and keep balance in your life. That is the focus of this commentary.

Does sympathy help during conflicts and negotiations?

Empathy puts yourself in someone else’s shoes emotionally. Sympathy by comparison is when you have feelings of pity or sorrow for someone else’s misfortune. In a dispute, conflict, or negotiation does sympathy work for or against you? You may be surprised. In this article by the Harvard Program on Negotiation they looked at five studies. What they found was that although you may have thought that sharing vulnerabilities may have caused the other side to pounce on the weakness, just the opposite was the case. Those that shared information about dealing with a difficult situation created a more mutually beneficial agreement. This commentary looks at this question a bit deeper.

Does lying in collaborative business deals really pay off?

As a promoter of collaboration, a mediator, a conflict resolution specialist, and a person that teaches ethics and negotiations, I did not initially appreciate the title  of The Dark Side of Collaboration offered by Scientific America. However, the subtitle of  “People working together often scheme to put profits ahead of telling the truth. New research points out ways to stop this behavior” gave me hope. I found this article extremely helpful and enlightening. This commentary that follows shares some of the highlights of that article and offers some additional observations.

Want to know how to avoid conflict when delegating or being delegated to?

The number one problem for new managers is believing they have to do it all and show that they can get things done. This can result in conflict, frustration,  and even burn out. As a leader focusing on listening delegation is a tool to be both more effective and efficient. The lack of delegation is a major issue for many managers. This commentary explores delegation, obstacles to delegation, effective delegation, six key elements of delegation, benefits of delegation, and gives you links to both the delegator’s checklist and the delegatee’s check list.

Should you lead with compassion, toughness, or empathy –why does this matter?

To avoid negative conflict and disputes and to promote collaboration, alignment, and purpose it is important to lead with compassion, have appropriate toughness, and listen with empathy. As a leader all of these matter. When someone is not performing well how should you proceed? Frustration is often a first response. I am sure you can relate. Especially if it reflects negatively on you. Responding with negative reinforcement is an initial knee jerk reaction, but research shows that when confronted with an underperforming employee that compassion and curiosity with suspended judgment works better. With appropriate coaching  to the individual, you may have far better results. Compassion and empathy build trust. You want greater trust to promote improvement.

Diversity, Inclusion, Hair, and Business Results - What do they have in common?

What do diversity, inclusion, hair, and business results have to do with each other. Conflicts or disputes may arise from one of a number of issues. To avoid conflicts or disputes takes an active effort to promote communication and collaboration. When you think of diversity you likely think about the primary level of what you can see, and you think about areas such as race, age, ethnicity, gender, physical abilities, sexual orientation, and class. As a secondary level below the human surface, you may think of elements of religious beliefs, nationality, geographic location, marital status, parental status, education, income, work background, and military experience may come to mind. Finally at a third level elements of learning style, personality, or professional orientation may come to mind. All of these are relevant related to diversity, but in today’s commentary the focus is on the primary level with a focus on hair and what you can see.