What, if any, are the considerations in appraisals for gift and estate tax?
Reece: The basic guidelines for the appraisal of closely held business equity for federal gift and estate tax purposes are set forth in revenue ruling 59-60, the Internal Revenue Code, Treasury Regulations to the Code and subsequent various revenue rulings. The standard of value applied to all gift, estate and income tax matters concerning the IRS is fair market value. Fair market value is defined as the price at which the subject interest would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having knowledge of all relevant facts. Q: How do you value customers and other intangibles? Reece: Cost-based methods for valuation of intangible assets is most applicable in the following situations: 1. When the cost to construct the intangible asset is well-supported and when the intangible asset is relatively new or suffers from little obsolescence. 2. When appraising special purpose, internally developed intangible assets.
