AICPA proposed business valuation standards exposed for public comment.

The AICPA Consulting Services Executive Committee has released a draft of proposed business valuation (BV) standards for CPAs who provide BV services or whose engagements involve BV. Proposed Statement on Standards for Valuation Services is being exposed for public comment through June 15, 2005. The AICPA urges all members--including Tax Section members--to review and comment, as the proposed BV standards will apply to valuations performed starting in 2006, including those done for tax compliance or planning purposes. To download a copy, visit the "Exposure Drafts" section of the AICPA website, at hHp://aicpa.org/index.htm.

When to Apply the Standards

The standards might apply, for example, when (1) valuing u block of publicly traded stock, if the analysis includes consideration of a discount for blockage, lock-up or other contractual or market restrictions; (2) valuing nonpublicly traded stock; and (3) computing the fair market value of assets in a charitable remainder trust. The draft BV standards also include a Q&A section in Appendix A; see pp. 37-47 for specific Q&As on tax engagements. The flowchart on p. 11 may help in clarifying the standards' applicability.

Review and Comment

The AICPA Tax Section encourages members to comment on the draft, particularly on the tax Q&As, or to submit questions. Tax advisers may want to pay particular attention to standards that pertain to lax areas in which the IRS, or a state or other governmental or judicial authority, prescribes valuation developmental or reporting procedures (see p. 10, paragraph 9). The Tax Division is interested in feedback on various particular authorities that may differ with those in the proposed standards; please send comments and questions to [e-mail].

Eileen Sherr, AICPA Technical Manager