- 10 -
60, 1959-1 C.B. 237, 238-242, sets forth criteria that are
virtually identical to those listed in section 25.2512-2(f)(2),
Gift Tax Regs., and "has been widely accepted as setting forth the
appropriate criteria to consider in determining fair market
value". Estate of Newhouse v. Commissioner, supra at 217.
Section 5 of Rev. Rul. 59-60, 1959-1 C.B. at 242-243, which
addresses the determination of the fair market value of the stock
of a closely held investment company, provides in pertinent part:
(b) The value of the stock of a closely held
investment or real estate holding company, whether or
not family owned, is closely related to the value of the
assets underlying the stock. For companies of this type
the appraiser should determine the fair market values of
the assets of the company. Operating expenses of such a
company and the cost of liquidating it, if any, merit
consideration when appraising the relative values of the
stock and the underlying assets. The market values of
the underlying assets give due weight to potential
earnings and dividends of the particular items of
property underlying the stock, capitalized at rates
deemed proper by the investing public at the date of
appraisal. A current appraisal by the investing public
should be superior to the retrospective opinion of an
individual. For these reasons, adjusted net worth
should be accorded greater weight in valuing the stock
of a closely held investment or real estate holding
company, whether or not family owned, than any of the
other customary yardsticks of appraisal, such as
earnings and dividend paying capacity.
There is no fixed formula for applying the factors that are
to be considered in determining the fair market value of unlisted
stock. See Estate of Goodall v. Commissioner, 391 F.2d 775, 786
(8th Cir. 1968), vacating and remanding T.C. Memo. 1965-154. The
weight to be given to the various factors in arriving at fair
market value depends upon the facts of each case. Sec. 25.2512-
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011