IRC 409A Common Stock Valuation
This free, guided checker walks your team through the key decision points for IRC 409A Common Stock Valuation. Answer a few questions to see the likely approach and the evidence to document.
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For owners, CFOs, and deal and reporting teams
Standard and Premise of Value Selection
This free, guided checker walks your team through the key decision points for Standard and Premise of Value Selection. Answer a few questions to see the likely approach and the evidence to document.
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Official guidance links
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Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level valuation screening aid for general information only and is not a valuation, appraisal, accounting, tax or legal opinion. A defensible conclusion of value requires a qualified valuation specialist applying professional standards to entity-specific evidence.
The questions this tool walks you through
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Is the purpose of the valuation established and documented?
Purpose determines the required basis of value; the same interest can carry different values under different bases. Document the intended use and users before proceeding, because a basis chosen for convenience rather than mandated by purpose is not defensible.
Establish and document the purpose and intended use before selecting a basis of value under IVS 104.
Official guidance: International Valuation Standards
Which purpose does the engagement serve?
Each purpose maps to a mandated standard: tax to fair market value, financial reporting to ASC 820 or IFRS 13 fair value, statutory matters to the jurisdiction's standard, and buyer-specific analysis to investment value. Confirm the standard against the controlling authority rather than assuming they are interchangeable.
Apply fair market value under Rev. Rul. 59-60. Apply fair value as an exit price under ASC 820-10-20. Apply the standard set by the governing statute or case law. Apply investment value to the identified party.
Official guidance: International Valuation Standards
Does the selected standard assume a hypothetical, financially capable, and willing buyer and seller acting at arm's length?
A market standard uses hypothetical, disinterested parties; investment value reflects a specific party's synergies, financing, and tax position. Naming the standard correctly is essential because it changes whether buyer-specific synergies belong in the conclusion.
Document the engagement as investment value to a specified party and disclose that it is not fair market value or fair value.
Official guidance: International Valuation Standards
Is the business worth more continuing to operate than it would be if its assets were sold off?
The premise of value is the assumed operating condition: going concern, orderly liquidation, or forced liquidation. Test whether continued operation or asset disposal produces the higher value, because the premise determines which valuation approaches are even appropriate.
Apply a liquidation premise (orderly or forced) and value the assets net of disposal costs and liabilities.
Official guidance: International Valuation Standards
Does the interest being valued control the enterprise, or is it a non-controlling (minority) interest?
The level of value (control versus minority, and marketable versus non-marketable) must align with the standard of value. A statutory fair value standard for dissenting shareholders frequently excludes minority and marketability discounts, whereas fair market value for gift and estate tax generally allows them.
Conclude value at the control level consistent with the selected standard and premise. Conclude value at the non-controlling level and address lack-of-control and marketability adjustments unless the standard excludes them. Resolve the level of value before finalizing, since it governs which discounts apply.
Official guidance: International Valuation Standards
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