Revenue Ruling 59-60
Ruling that is the most significant source for the valuation of closely held corporation capital stock critical to the close corporation plan. This ruling defines the 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 the relevant facts." The valuation of the shares of closely held corporations involves the comparison of "prices at which the stocks of companies engaged in the same or similar line of business are selling in a free and open market." This ruling stipulates that the following factors must be carefully considered in such an evaluation: intangible values such as goodwill; financial ability to generate an ongoing dividend stream; earnings capability; type of business and its financial and market history; economic outlook for the industry in which the business resides; financial condition of the corporation as well as the book value of its stock; size of the block of stock requiring a valuation; and market value of stocks actively traded on an exchange or over-the-counter market of similar corporations engaged in similar lines of business.
Popular Insurance Terms
Model state law of the NAIC that requires that the insurance policy contain language that meets a readability test (usually, the Flesch readability test that uses a formula approach to ...
Retirement plan for an individual based on a single contract with a benefit based on current earnings, as if they will remain static until normal retirement age. As the earnings of the plan ...
Complete coverage for hospital and physician charges subject to deductibles and coinsurance. This coverage combines basic medical expense policy and major medical policy. ...
Mechanism used by a fidelity and surety insurance company to spread its liability through reinsurance by issuing a surplus treaty as a first layer of coverage, thereby enabling a cedent to ...
Life insurance contract that combines TERM LIFE INSURANCE with WHOLE LIFE INSURANCE. The term portion of the contract expires after a stipulated time period. If the insured dies during this ...
Business involved in buying and selling securities and mutual funds. ...
Association that represents reinsurance companies as well as insurance companies that do not market marine insurance. LIRMA and the institute of London underwriters share the same facility ...
Individuals other than the crew of a ship who forcefully steal the ship and/or its cargo. This event is an insured peril under ocean marine insurance. ...
First step in the risk management process. The objective is to determine the sources of losses. For example, the profit and loss statement of a business firm not only shows the sources of ...
Have a question or comment?
We're here to help.