USA Is there a common definition of Gross Income?

[Klick68]

Apologies if this is too simple of a question to be posted here. My company does about $3.5 million in income/revenues a year. We don't manufacture any goods that are sold but rather do consulting, etc. so we are never left with physical items on a shelf at the end of the year that need to be written off.

I have a 20% stake that is valued at 20% of our gross income for the previous 12 month.

Is my 20% valued at 20% of $3.5 million and roughly $750,000 or are there other considerations (expenses, salaries, sales commissions)?

I ask because my majority partners want to restructure my deal to make it worth $300,000 and I want to figure out if this is fair or not.

 

[Bert82]

I'm not sure if this helps: http://smallbusiness.chron.com/differences-between-net-gross-income-business-22702.html

Nevertheless it seems a little bit strange to me to calculate from Gross income instead net income. Are no salaries paid or other expenses?

 

[Klick68]

Salaries are paid and there are plenty of expenses...but they chose the words gross income when our business was worth zero. So now that it is worth something they want to change the agreement. I basically want to be able to tell them:

"accounting definitions and our agreement have my stake valued at $750K. If you want me to give up $450K in value and say it is only worth $300K that is fine but then you need to give me something in return for giving up $450K. Otherwise I am cashing out for $750K as that is what my agreement states."

 

[Bert82]

A 20% stake as a minority to your (only one?) partners 80% is a weak bargaining position. I've seen companies with 49%/51% stakes where 49% has been totally kicked out of the company after dispute about peanuts.

Regarding "accounting definition" a better term would have been "gross profit" (http://www.investopedia.com/terms/g/grossincome.asp); also 20% of 3,5Mio$ = 700k$ (instead of 750k$)

Finally, try page 8/20 here: https://eia-international.org/wp-content/uploads/accounting_basics1.pdf

That's all i can offer for this situation.

 

[Klick68]

Thanks Bert82! It gets a bit stranger given that it says the only way I can cash out is that I have to sell it to my partners for 20% of gross income which seems pretty cut and dry