At her death, Chow owned 55% of the stock in Finch Corporation, with the balance held by family members. In the past five years, Finch has earned average net profits of $1,680,000, and on the date of Chow's death, the book value of its stock is $4,200,000. An appropriate rate of return for Finch's business is in is 5.75%. If required, round your intermediate computations to the nearest dollar. a. If goodwill exists, the total value of Finch stock is What value would the IRS argue that the stock Chow owned should be included in her estate? Feedback b. Considering the facts given, identify some factors that could be present to reduce the value of such goodwill by selecting "Yes" for ones that can impact a goodwill valuation and "No" for ones that won't. 1. Extraordinary gains. 2. Check My Work Revenue Ruling 59-60 sets forth the approach, methods, and factors to be considered in valuing the shares of closely held corporations fa and estate tax purposes. 3. Lower than industry average salaries. Chow was the key person in the success of the business. Yes Yes Yes V ✓

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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413.
At her death, Chow owned 55% of the stock in Finch Corporation, with the balance held by family members. In the past five years, Finch
has earned average net profits of $1,680,000, and on the date of Chow's death, the book value of its stock is $4,200,000. An appropriate
rate of return for Finch's business is in is 5.75%.
If required, round your intermediate computations to the nearest dollar.
a. If goodwill exists, the total value of Finch stock is s
What value would the IRS argue that the stock Chow owned should be included in her estate?
Feedback
Check My Work
Revenue Ruling 59-60 sets forth the approach, methods, and factors to be considered in valuing the shares of closely held corporations for gl
and estate tax purposes.
b. Considering the facts given, identify some factors that could be present to reduce the value of such goodwill by selecting "Yes" for ones
that can impact a goodwill valuation and "No" for ones that won't.
1. Extraordinary gains.
2.
Lower than industry average salaries.
3. Chow was the key person in the success of the business.
Yes
Yes
Yes
-V
✔
Transcribed Image Text:At her death, Chow owned 55% of the stock in Finch Corporation, with the balance held by family members. In the past five years, Finch has earned average net profits of $1,680,000, and on the date of Chow's death, the book value of its stock is $4,200,000. An appropriate rate of return for Finch's business is in is 5.75%. If required, round your intermediate computations to the nearest dollar. a. If goodwill exists, the total value of Finch stock is s What value would the IRS argue that the stock Chow owned should be included in her estate? Feedback Check My Work Revenue Ruling 59-60 sets forth the approach, methods, and factors to be considered in valuing the shares of closely held corporations for gl and estate tax purposes. b. Considering the facts given, identify some factors that could be present to reduce the value of such goodwill by selecting "Yes" for ones that can impact a goodwill valuation and "No" for ones that won't. 1. Extraordinary gains. 2. Lower than industry average salaries. 3. Chow was the key person in the success of the business. Yes Yes Yes -V ✔
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