Valuation of closely held business interests for estate and gift tax purposes is a complex undertaking. A foundational document providing guidance on this subject is a Revenue Ruling issued by the U.S. Internal Revenue Service. This ruling outlines various factors to consider when determining the fair market value of such interests. These factors encompass a company’s financial history, economic outlook, the industry it operates in, and the value of comparable publicly traded businesses.
The principles articulated within the ruling have served as a cornerstone for valuation professionals, tax attorneys, and the courts for decades. It establishes a framework for arriving at a reasoned and supportable valuation, minimizing potential disputes with tax authorities. The document emphasizes a holistic approach, requiring consideration of both quantitative and qualitative aspects of the business being valued. Its long-standing influence demonstrates its enduring relevance in the field of business valuation.
