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(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.
(f) Whether or not the enterprise has goodwill or
other intangible value.
(g) Sales of the stock and the size of the block
of the stock to be valued.
(h) The market price of stocks of corporations
engaged in the same or a similar line of business
having their stocks actively traded in a free and open
market, either on an exchange or over-the-counter.
[Rev. Proc. 59-60, sec. 4.01.]
III. Approaches to Valuation
In the case of nonpublicly traded stock the value of which
cannot be determined by relevant arm’s-length sales, fair market
value is generally determined by using three approaches. The
first approach is the market approach. The second approach is
the income approach. The third approach is the asset-based
approach. Each of these three approaches includes various
valuation methods. The approach to apply in a given case is a
question of law. Powers v. Commissioner, 312 U.S. 259, 260
(1941); Bank One Corp. v. Commissioner, 120 T.C. at 306.
Litigants in this Court are usually assisted by experts in
applying these approaches.
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