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
Assets from a will transfer into an established life insurance trust. Through this mechanism, assets that have been probated are transferred into a living trust. ...
Reinsurance broker for a primary company (the re-insured). This broker is paid commissions by the reinsurance company, just as an agent is paid commissions by an insurance company for ...
Insurance company that is organized under the state laws by which the company is licensed and that is called a domestic insurer. Also, this insurance company may be chartered and licensed ...
Attachment of decreasing term life insurance to an ordinary life policy to provide monthly income to a beneficiary if death occurs during a specified period. If the insured dies after the ...
Investment risk associated with the relationship between the yield (interest, dividends, and capital) of financial instruments and the rate of inflation in the economy. For fixed income ...
Court-appointed or commissioner of insurance-appointed custodian to manage the affairs of an insurance company whose management is deemed unable to manage that company in a proper fashion. ...
Method of establishing rates in which the current year's premium is calculated to reflect the actual current year's loss experience. An initial premium is charged and then adjusted at the ...
Statement showing assets and liabilities of an individual. ...
Law by which many states attempt to regulate insurers who are unlicensed in those states. With a few notable exceptions, such as re insurers, insurance companies must be licensed in the ...
Have a question or comment?
We're here to help.