[Code of Federal Regulations]
[Title 26, Volume 14]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR25.2512-3]

[Page 543]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 25_GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954--Table of Contents
 
Sec.  25.2512-3  Valuation of interest in businesses.

    (a) Care should be taken to arrive at an accurate valuation of any 
interest in a business which the donor transfers without an adequate and 
full consideration in money or money's worth. The fair market value of 
any interest in a business, whether a partnership or a proprietorship, 
is the net amount which a willing purchaser, whether an individual or a 
corporation, would pay for the interest to a willing seller, neither 
being under any compulsion to buy or to sell and both having reasonable 
knowledge of the relevant facts. The net value is determined on the 
basis of all relevant factors including--
    (1) A fair appraisal as of the date of the gift of all the assets of 
the business, tangible and intangible, including good will;
    (2) The demonstrated earning capacity of the business; and
    (3) The other factors set forth in paragraph (f) of Sec.  25.2512-2 
relating to the valuation of corporate stock, to the extent applicable.

Special attention should be given to determining an adequate value of 
the good will of the business. Complete financial and other data upon 
which the valuation is based should be submitted with the return, 
including copies of reports of examinations of the business made by 
accountants, engineers, or any technical experts as of or near the date 
of the gift.
    (b) [Reserved]