Chapter 7: Valuation Adjustments: Discounts and Premiums and Reconciliation of Indicated Values

Question 1

What source can be used to assist the valuator in selecting an appropriate range of discounts for lack of control?

Answer 1

Mergerstat Review

Question 2

What source can be used to assist the valuator in selecting the implied discount for lack of marketability?

Answer 2

Restricted stock studies, Emory Studies

Question 3

What revenue ruling represents the official IRS position on the concept of aggregating family member’s ownership interests for the purpose of determining FMV?

Answer 3

Revenue Ruling 93-12

Question 4

What did the court do in Mandelbaum vs. Commissioner?

Answer 4

Focused on the factors to consider in determining a discount for lack of marketability.

Question 5

What does the Simplot case address?

Answer 5

1. Discount for lack of marketability
2. Built-in gains tax
3. Voting versus nonvoting stock

Question 6

What was opined in the appeal of Dunn v. Commission?

Answer 6

The lesser the likelihood of a company’s liquidation, the greater the weight that must be assigned to the income approach versus the asset approach.