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
Payment of that portion of the annual premium by the employee necessary to cover the PS-58 cost for that given year. Any unpaid premium balance for that particular year is paid by the ...
Measurement of how people feel about prevailing economic conditions, employment outlook, and personal finances. This index is based on statistics gathered from questionnaires mailed by the ...
Buy-sell agreements found in partnerships, sole proprietorships, and close corporations. Either the business entity or the surviving members of the business agree to buy out the interest of ...
Circumstance in which an insurance company can issue life or health insurance to an applicant based on standards set by the company. ...
Means of supplementing an executive's retirement benefits by deferring a portion of his or her current earnings. Deferring income in this manner encourages the loyalty of executives. To ...
Annuity that continues income payments as long as the annuitant lives, ceasing upon the individual's death. ...
Value of a foregone opportunity, one rejected in favor of a presumably better opportunity. For example, investment of a sum into a mutual fund instead of a variable annuity with a ...
Coverage for small groups that cannot meet the underwriting standards of true group insurance. Even though the franchise insurance covers an entire group, individual policies are written on ...
Entitlement of a pension plan participant (employee) to receive full benefits at normal retirement age, or a reduced benefit upon early retirement, whether or not the participant still ...
Have a question or comment?
We're here to help.