Normalizing adjustments to a firm's historical financial statements may be necessary to apply the income approach. Such adjustments may be necessary to measure a firm's true economic earnings, which may differ from the amounts reported on its financial statements. These kinds of adjustments to historical financial statements are relatively common when valuing privately-owned businesses because private owners tend to run their firms differently than managers of public firms who have many shareholders and are regulated by SEC. Forensic accounting skills are often needed to make these adjustments. 1. Identify one normalization adjustment you might make in a business valuation and explain why it affects a firm's value. 2. For this adjustment, discuss whether you need to consider any income tax effect. 3. Discuss any nuances you might face in making this adjustment depending on whether you are valuing a controlling interest in a firm or a non-controlling (minority) interest. 4. Discuss how you might quantify this adjustment.