Valuation for Estate and Gift Tax

Sack Associates has prepared many valuations for both estate and gift tax purposes. These valuations are prepared under the guidance of Revenue Ruling 59-60 and 93-12.

In Revenue Ruling 93-12, the IRS accepted that a family’s level of control over the corporation is not a consideration when a minority interest in the stock is transferred to family members. For example, when a parent gifts a minority interest to a child, a minority discount is still applied when valuing the shares even though the aggregate sum of shares held by the parent and child or child alone may equal a controlling interest.

In Revenue Ruling 59-60, the IRS set forth the factors that appraisers should consider when valuing a closely held business for estate and gift tax purposes. The eight factors are as follows:

• The nature and history of the business;
• The economic outlook in general and the industry specific outlook;
• The book value of the stock and the financial condition of the business;
• The earning capacity of the business;
• The dividend paying capacity of the business;
• The goodwill and intangible assets of the business;
• The sales of stock and size of the block to be valued; and
• The market price of stocks of similar businesses that are actively traded in a free and open exchange or over the counter.

Sack Associates’ business valuations for estate and gift tax reporting satisfy all IRS requirements.