Trust, Estate, & Tax Planning

A fair market value appraisal can be a critical first step in the estate planning process or transitioning a business to the next generation.  FairValue Advisors has a broad range of experience with valuation issues pertaining to estate tax and related planning.

There are many estate planning tools that involve the sale, gift, or contribution of an equity interest in a closely-held business. Depending on the value of the transfer, the Internal Revenue Service requires the taxpayer to report the fair market value of the closely-held business interest. Upon death, a taxpayer’s estate may include closely-held stock or other illiquid securities, which may also require a fair market value determination for Federal Estate tax purposes or to determine basis. 

Guidelines for determining the fair market value of closely-held business interests are included in IRS Revenue Ruling 59-60, which defines fair market value as:

“the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. Court decisions frequently state in addition that the hypothetical buyer and seller are assumed to be able, as well as willing, to trade and to be well informed about the property and concerning the market for such property.” – Rev. Rul. 59-60 (159-1 C.B. 237) 

At FairValue Advisors, our appraisals are specifically designed to comply with the IRS valuation guidelines described in Revenue Ruling 59-60 and the Adequate Disclosure Rules.