Determining the value of someone’s interest in a privately held business is essential for both tax and business reasons. The CPAs at DWD perform business valuations for many reasons, including:
Income Tax Purposes
Certain transactions may require determining the fair market value of stock in a business to accurately assess tax liability, which can help avoid underpayment and overpayment of taxes. Tax-related valuations are prepared for a variety of purposes, such as compensation in the form of stock or options, charitable contributions, S corporations elections, and purchase price allocations.
Estate and Gift Taxes
Valuations of business interests are beneficial for estate planning, gifting, estate settlement, and Internal Revenue Service reporting of estate or gift transactions. A properly prepared valuation can help avoid IRS challenges, exposure to under valuation penalties and disputes amongst heirs.
Business Acquisition, Sale or Merger
In selling situations, a valuation may help set realistic price expectations. If someone is planing to buy a business, a valuation may protect him or her from paying more than a business is worth. Conversely, someone trying to sell a business interest will want to ensure a fair selling price.
Interested in obtaining a business valuation? Contact our office today.