- 32 -
v. Commissioner, T.C. Memo. 1991-615; sec. 20.2031-2(b), Estate Tax
Regs. In the absence of such an arm's-length sale, in valuing
unlisted stock we often look to the value of publicly traded stock
of corporations engaged in similar lines of business. See sec.
2031(b); Estate of Hall v. Commissioner, 92 T.C. 312, 336 (1989).
Factors relevant in valuing stock in closely held corporations
include:
(a) The nature of the business and the history of the
enterprise from its inception.
(b) The economic outlook in general and the condition
and outlook of the specific industry in particular.
(c) The book value of the stock and the financial
condition of the business.
(d) The earning capacity of the company.
(e) The dividend-paying capacity [of the company].
(f) Whether or not the enterprise has goodwill or other
intangible value.
(g) * * * the size of the block of stock to be valued.
[and]
(h) The market price of stocks of corporations engaged
in the same or similar line of business having their
stocks actively traded in a free and open market, either
on an exchange or over-the-counter.
Rev. Rul. 59-60, 1959-1 C.B. 237, 238-239; see also sec. 20.2031-
2(f)(2), Estate Tax Regs.
This revenue ruling "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.
Nevertheless, these factors cannot be applied with mathematical
precision. See Rev. Rul. 59-60, supra, 1959-1 C.B. at 238. As the
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011