This chapter explores the Service's positions on valuation as expressed in Tax Advice Memorandums (TAMs), Revenue Rulings (Rev. Rul.), and Revenue Procedures (Rev. Proc.). The chapter covers the following material:
- Rev. Rul. 59-60 is the foundation of modern valuation. It holds that all factors must be considered in valuation and adopts no particular method, although it does list several that can be considered. Originally, it applied only to estate and gift tax issues.
- Rev. Rul. 65-192 expanded Rev. Rul. 59-60 to include income tax and other tax issues, while reserving earlier “formula” approaches for intangible assets. It was replaced by Rev. Rul. 68-609.
- Rev. Rul. 65-193 modified Rev. Rul. 59-60 by deleting any rule for valuation of intangible assets.
- Rev. Proc. 66-49 extended the principles of Rev. Rul. 59-60, with appropriate modifications, to valuation of contributed property.
- Rev. Rul. 68-609 replaced Rev. Rul. 65-192 and clearly stated that the formula approach could be used for intangible assets only when no other method was available.
- Rev. Proc. 77-12 used the principles of Rev. Rul. 59-60 in allocating value among assets for basis purposes where the company was purchased for a lump sum or was a subsidiary merged into its parent.
- Rev. Rul. 77-287 dealt with valuation of stock that is restricted from resale under the federal securities laws. It listed several factors to be considered and the weight each was to be given.
- Rev. Rul. 83-120 ...