Gift, Trusts and 
Stock Allocation Value

Why a Gift or Trust Valuation Is Required

A business valuation is essential whenever ownership changes hands outside a typical sale. The following scenarios require a certified valuation:

• Gifting of Ownership Interests
  When transferring stock or membership interests to family members, partners, or others, the IRS requires a qualified valuation to determine fair market value (FMV) for gift tax purposes.

• Trust Formation or Distribution
  When moving business assets into or out of a trust, FMV must be established under IRS Revenue Ruling 59-60 and Treasury Regulation §25.2512-1.

• Date-of-Death (Estate) Valuations
  For estate filings, date-of-death valuations determine the taxable value of a decedent’s ownership interest in accordance with IRC §2031 and §2032 (alternate valuation date).

• 401(k) & ERISA-Held Business Interests
  Valuations are required for ESOP or 401(k) plan assets that include privately held stock, ensuring compliance with ERISA and Department of Labor regulations.

• Stock Transfers or Redemptions
  When stock is sold, redeemed, or transferred between related parties, a valuation ensures compliance with IRS Section 409A and provides a supportable value for reporting and financial planning.

IRS Revenue Ruling 59-60 Compliance

Our Arizona valuations strictly adhere to Revenue Ruling 59-60, which defines fair market value as:

“The price at which the property would change hands between a willing buyer and a willing seller, neither being under compulsion to buy or sell and both having reasonable knowledge of relevant facts.”

Each Monarch valuation includes detailed analysis of the eight key 59-60 factors, including:

1. Nature and history of the business

2. Economic outlook and industry conditions

3. Book value and financial condition

4. Earning capacity

5. Dividend-paying capacity

6. Goodwill and intangible value

7. Prior sales of the stock

8. Market values of comparable businesses

Defensible Valuation Methodologies

Our reports integrate the most defensible methods recognized by the IRS and Arizona courts:

• Asset-Based Approach – For companies with significant tangible assets or minimal income.

• Capitalized Earnings Approach – For stable, profitable entities.

• Discounted Cash Flow (DCF) – For forecasting future benefit streams.

• Market Approach – Based on comparable transactions and guideline public company data.

All valuations are adjusted for lack of control (DLOC) and lack of marketability (DLOM) when minority interests are valued—typically 25–35% for privately held Arizona entities, consistent with accepted case law (e.g., Pratt v. Commissioner).

Typical Purposes for a Gift & Trust Valuation

• Gifting ownership interests to children or grandchildren

• Transferring shares to or from a family trust

• Estate settlement and date-of-death reporting

• Stock redemptions or buy-sell agreements

• IRS audit defense

• Divorce or partnership dissolution

• 401(k)/ESOP plan compliance

• Charitable donations and planned giving

Arizona Expertise

Arizona Business Valuation brings extensive experience across the state of Arizona, serving clients in:

• Phoenix • Scottsdale • Tucson • Flagstaff • Sedona • Prescott

Each report is tailored to state and federal requirements, including Arizona Revised Statutes Title 14 (Trusts & Estates).

Why Choose Arizona Business Valuation

• Certified and IRS-compliant valuations

• Expertise in complex ownership structures

• Defensible reports ready for audit or litigation

• Transparent process and fast turnaround