Standards of Value: Theory and Applications, Second Edition

Standards of Value: Theory and Applications

May 2013 Hardcover (458 pages)

Jay Fishman, Shannon Pratt, William Morrison

John Wiley & Sons, Inc.

Written by Jay Fishman, Shannon Pratt, and William Morrison—three renowned valuation practitioners—Standards of Value, Second Edition discusses the interaction between valuation theory and its judicial and regulatory application. This insightful book addresses standards of value (SOV) as applied in four distinct contexts: estate and gift taxation; shareholder dissent and oppression; divorce; and financial reporting. Here, you will discover some of the intricacies of performing services in these venues.

  • Features new case law in topics including personal good will and estate and gift tax, and updated to cover the new standards issued since the first edition
  • Includes an updated compendium discussing the standards of value by state, new case law covering divorce, personal goodwill, and estate and gift tax, and coverage of newly issues financial standards
  • Shows how the Standard of Value sets the appraisal process in motion and includes the combination of a review of court cases with the valuator's perspective
  • Addresses the codification of GAAP and updates SOV in individual states

"Everyone in our profession should have this book in their library." 
Gary R. Trugman CPA/ABV, MCBA, ASA, MVS, President, Trugman Valuation Associates, Inc.

Get Standards of Value, Second Edition and discover the underlying intricacies involved in determining "value." 

Categories: estate and gift taxation fair value for financial reporting

Table of Contents:

  • Foreword
  • Preface
  • Acknowledgments
  • About the Authors
  • Introduction
  • Purpose
  • Every Appraisal Is Unique
  • Fair Value versus Fair Market Value
  • Historical Perspective
  • Chapter Preview
    • Chapter 1: Common Standards and Premises of Value
    • Chapter 2: Fair Market Value in Estate and Gift Tax
    • Chapter 3: Fair Value in Shareholder Dissent and Oppression
    • Chapter 4: Standards of Value for Partnership and Limited Liability Company Buyouts
    • Chapter 5: Standards of Value in Divorce
    • Chapter 6: Fair Value in Financial Reporting
  • How Standard of Value Can Affect the Ultimate Conclusion of Value 

  • Chapter 1 Common Standards and Premises of Value
    • Common Standards and Premises
    • Price, Value, and Cost
    • Defining a Standard of Value
    • Premises of Value
    • Common Standards of Value
    • Fair Market Value
    • Fair Value
    • Investment Value
    • Intrinsic Value
    • Book Value
    • Common Operational Premises Underlying the Standard of Value
    • Going Concern
    • Liquidation Value
    • Fair Value in Alternative Contexts
    • Fair Market Value in Alternative Contexts
    • Standards of Value in the International Context
    • Summary
  • Chapter 2 Fair Market Value in Estate and Gift Tax
    • Introduction
    • Common Definitions of Fair Market Value
    • History of Fair Market Value
    • United States v. Fourteen Packages of Pins
    • Elements of Fair Market Value
    • Price at Which a Property Would Change Hands
    • Willing Buyer
    • Willing Seller
    • No Compulsion to Buy or Sell
    • Reasonable Knowledge of Relevant Facts
    • Common Discounts
    • Summary
  • Chapter 3 Fair Value in Shareholder Dissent and Oppression 
    Gilbert E. Matthews and Michelle Patterson
    • Fair Value as the Standard of Value in Dissent, Oppression, and Entire Fairness Cases
    • The Appraisal Remedy for Dissenting Shareholders
    • History and Overview of the Appraisal Remedy
    • Appraisal Rights Today
    • Appraisal Rights in Publicly Traded Corporations: The Market Exception
    • Fair Value Can Be Less Than Arms’-Length Price
    • The Oppression Remedy
    • Development of the Oppression Remedy
    • Context of Oppression Remedy
    • Dissolution as a Remedy for Oppression
    • Shareholder Buyouts as an Alternative Remedy
    • Examples of Oppression
    • Fair Value Is the Standard of Value in Appraisal and Oppression in Almost All States
    • Fair Value as Defined by Various Authorities and Statutes
    • The Valuation Date—Before the Effectuation of the Corporate Action to Which the Shareholder Objects
    • Valuation Date in Appraisal Cases
    • Valuation Date in Oppression Cases
    • Customary and Current Valuation Techniques
    • Fair Value in Delaware
    • Delaware Fair Value Standards
    • Entire Fairness in Delaware
    • Components of Fair Value in Delaware
    • Ohio’s Unique and Unfavorable Standard of Value in Appraisals
    • Fair Value Normally Excludes Discounts and Premiums
    • Most States Now Reject Minority and Marketability Discounts
    • Levels of Value
    • Discounts at the Shareholder Level
    • The “Implicit Minority Discount”
    • No Premiums Are Applicable to DCF Values
    • Discounts at the Corporate Level
    • Control Premiums at the Corporate Level
    • Some States Permit Considering Extraordinary Circumstances in Determining Whether to Apply Discounts
    • Court Decisions Have Moved toward Rejecting Discounts
    • Equitable Adjustments to Fair Value
    • Consideration of Wrongdoing in Calculating Fair Value
    • Damage Claims
    • Summary
  • Chapter 4 Standards of Value for Partnership and Limited Liability Company Buyouts 
    Noah J. Gordon
    • Introduction
    • Buyout upon Dissociation
    • Buyout in Lieu of Dissolution
    • Dissenters’ Rights
    • Partnerships and Limited Liability Partnerships (LLPs)
    • Limited Liability Partnerships
    • General Partnership Standard of Value Cases
    • Limited Partnerships
    • Limited Liability Companies, Generally
    • Uniform Acts
    • Buyout in Lieu of Dissolution
    • Withdrawal and Buyout
    • Dissenters’ Rights
    • Professional LLCs
    • LLC Decisions
    • Summary
  • Chapter 5 Standards of Value in Divorce
    • Introduction
    • Marital Property: General Background and History
    • Identification of Marital Property and Separate Property
    • Relationship between Valuation and Identification of Intangible Assets
    • Appreciation on Separate Property
    • Premises and Standards of Value in Divorce
    • Premises of Value
    • Standards of Value
    • Premises of Value Revealed through the Valuation of Insurance Agencies
    • Concepts of Value under the Two Premises
    • Standards of Value in Divorce among the 50 States
    • Lack of Statutory Insight
    • Revealing Standard of Value through Case Law
    • Toward a Standard of Value Classification System
    • Value in Exchange
    • Goodwill
    • Lack of Control and Marketability Discounts under Value in Exchange
    • Fair Value
    • Buy–Sell Agreements under Value in Exchange
    • Value to the Holder
    • Goodwill
    • Double Dipping
    • Shareholder-Level Discounts under the Value to the Holder Premise
    • Fair Value
    • Buy–Sell Agreements under Value to the Holder
    • Summary
  • Chapter 6 Fair Value in Financial Reporting 
    Neil J. Beaton
    • Introduction
    • Fair Value in Financial Reporting: What Is It?
    • Application of Fair Value
    • History of Fair Value in U.S. Accounting Literature
    • Application of the Fair Value Standard to Business Combinations
    • Application of the Fair Value Standard to Asset Impairment Tests
    • Interpretation of Fair Value Compared to Other Standards of Value
    • Fair Value in Financial Reporting versus Fair Value in Dissenters’ Rights Cases
    • Fair Value in Financial Reporting versus Investment Value
    • Fair Value in Financial Reporting versus Fair Market Value
    • Audit Issues
    • Summary
  • Appendix: Sources of Information
  • Appendix A International Business Valuation Standards
    • Introduction
    • International Valuation Standards Council
    • Valuation Organization
    • Broad Definitions
    • Approaches to Valuation
    • Types of Property
    • Toronto Valuation Accord
    • Mission and Objectives
    • Definitions
    • Fair Value Measurement
    • Conclusion
    • Royal Institute of Chartered Surveyors
    • International Financial Reporting Standards
  • Appendix B Chart— Fair Value in Dissent and Oppression
  • Appendix C Standards of Value in Divorce Classifications by State and Standard of Value
  • Index