Accountancy Associates, LLC
Revenue Ruling 59-60: the IRS guidelines for valuations conducted for estate & gift tax
purposes, income tax matters concerning the IRS, and shareholder agreements
As delineated by Revenue Ruling 59-60, under the Internal Revenue Code, in accordance to
Sections 2031, 2032, and 2512, a business valued for estate and gift tax purposes must be
based on the standard of Fair Market Value, willing seller/willing buyer. This is also
true for shareholder agreements and income tax matters concerning the IRS.
Revenue-Ruling 59-60 considers eight basic factors when valuing a closely-held entity,
including, but not limited to:
- The nature of the business and the history of the company.
- The general economic outlook and the condition and outlook of the particular
industry.
- The book value of the stock and the financial condition of the business.
- The earnings capacity of the business.
- The dividend-paying capacity.The dividend-paying capacity.
- Whether the business has goodwill or intangible value.
- Stock sales and size of the stock to be valued.
- The stocks market price of comparable corporations publicly traded and engaged
in the same or similar line of business.
