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
Requirement of state approval of property insurance rates and policy forms before they can be used. Individual states regulate insurers and approve their rates. There are three methods of ...
Payment to the seller over the seller's life expectancy for the sale of the seller's assets. This procedure provides for the immediate removal of assets that have appreciated from the ...
Protects a cedent against an aggregate amount of claims over a period, in excess of a specified percentage of the earned premium income. Stop loss reinsurance does not cover individual ...
Insurance coverage sold by a broker as contrasted with insurance coverage sold by an agent. ...
One named under provisions of the employee retirement income security act of 1974 (erisa) for a terminated pension plan with an unfunded liability for its benefits. ...
Circumstance which increases the probability of loss because of an applicant's personal habits or morals; for example, if an applicant is a known criminal. ...
Option under a participating life insurance policy by which the policy owner can elect to have the dividends purchase paid-up increments of permanent insurance. ...
Small business retirement plans created by the Small Business Job Protection Act of 1996. These plans permit small business owners who have fewer than 100 employees to establish an employee ...
a contract in life insurance that includes elements of whole life and term insurance. in pensions, a combined life insurance policy and a side (auxiliary) fund to enhance the amount of a ...
Have a question or comment?
We're here to help.