Business Valuation and Taxes
Chapter One
Standards of
Business Valuation
Summary
Introduction
Sources for Defining Value
Statutes
Treasury Regulations
Case Law
Contracts and Agreements
Revenue Rulings and Other Treasury Pronouncements
Professional Associations
Definitions of Value
Fair Market Value
Fair Value
Investment Value
Intrinsic Value
Premise of Value
Conclusion
SUMMARY
To determine the value of a business, one first must define the meaning of value. Although
there are various definitions of value, the exclusive definition for federal tax purposes is found
in the term fair market value. For nonfederal tax purposes, other standards for business value
include fair value, investment value, and intrinsic value.
Fair market value is defined by the U.S. Department of the Treasury ("the Treasury") and
involves a consideration of all relevant factors to determine value. It assumes an arms-length
transaction between a willing buyer and seller performing a transaction, without any compulsion
to buy or sell. The buyers and sellers are hypothetical, as is the market in which the transaction
takes place. Although individual characteristics of the ... read full excerpt from Business Valuation and Taxes: Procedure, Law, and Perspective ebook
