Discussion:Value of private company stock
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Discussion Forum Index --> Advanced Tax Questions --> Value of private company stock
Discussion Forum Index --> Tax Questions --> Value of private company stock
| 5 June 2008 | |
| Client wants to donate stock he owns in a private company. How would he evaluate it. He says it is over $5,000 value. Then what will the church do with the stock since it cannot be sold to the public
Neil | |
| 5 June 2008 | |
| Read the 8283 instructions. You'll need an appraisal from a qualified source. The church probably doesn't want to own and operate the company, probably doesn't want any contingent liabilities, so it may not want to accept the donation. Does he plan to buy it back from the charity? | |
| June 5, 2008 | |
| If it's not public traded so you can look it up on a stock exchange....an appraisal would be necessary IMHO. Would probably necessitate a business valuation of the entire company to establish value, then times his percentage of ownership. I've seen similar situtations when ownership was being gifted in closely held corps, and in buy/sell agreements.
I believe the rule for charitable contributions of appreciated prop would apply since the 'value' is over $ 5000. But if the church can't sell the stock (I assume it's restricted), is there REALY any value? Does the ownership entitle the church to any income or cash flow? And if the stock ownership IS restricted, can it be donated? The more I think, off the cuff, the more issues I see. | |
| 5 June 2008 | |
| Belle is correct, it does require a formal valuation of the company in order to receive any tax benefits. This type of transaction is usually done through a charitable lead/remainder trust. This might be more costly than he imagines.
It sounds to me that the client hasn't thought this through. He needs to talk with estate/ corporate attorney. | |
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