Tagging a text with the label “classic” should not be done carelessly. But 50 years after its initial release, few would disagree that Revenue Ruling 59-60 deserves the title. Written in the spare, unadorned style of a government publication, the Ruling is a compact storehouse of enduring practical wisdom for business appraisers and the users of appraisal reports.
At Mercer Capital, we decided the 50th anniversary of the Ruling’s release was a fitting time to compile this book. Having been actively appraising privately held businesses for over 25 of the 50 years since the Ruling’s issuance, we find ourselves often returning to the Ruling, whether for guidance in novel situations or simply to confirm some intuition. In short, it is a trusted companion.
To review the chapter list, keep reading.
- In Chapter 1, we walk through the various sections of the Ruling, summarizing what we find important, helpful, extraneous, and occasionally frustrating as appraisers.
- A well-crafted business appraisal tells a story. A key element of any story is its setting. The stories appraisers tell when preparing valuations under Revenue Ruling 59-60 are set in the land of fair market value. In Chapter 2, we unpack the definition of fair market value and discuss its implications for making and evaluating valuation judgments.
- Chapter 3 describes some of the primary challenges in applying the Ruling to the valuation of operating companies. We discuss some of the practical challenges faced, and judgments made, by appraisers when valuing operating companies.
- We turn our attention in Chapter 4 to asset-holding entities, reviewing some of the most common valuation methods and techniques used to value limited liability companies, family limited partnerships, and other businesses that exist primarily to hold assets rather than sell a product or service.
- In Chapter 5, we consider the role of intangible assets in the value of a business. Despite being written in a day when a far greater portion of business value was attributable to tangible assets, Revenue Ruling 59-60 is prescient with respect to the contribution of intangible assets to the value of a business.
- Chapter 6 offers some (perhaps unsolicited) advice for attorneys, accountants, and business owners who find themselves in need of a business appraiser.
- Our good friend Paul Hood takes the reins in Chapter 7, providing an exhaustive overview of some of the landmark court cases related to the Ruling. Paul is a successful and well-respected estate planning attorney, and we are grateful for his incisive and informative commentary.
- Three appendices close out the book. The first simply reproduces the text of Revenue Ruling 59 60 in its entirety, and the second is a bibliography of pertinent court cases. In Appendix C, we provide a sketch of what the U.S. economy, in its broad contours, looked like in 1959. What is perhaps most striking about Revenue Ruling 59-60 is its continued relevance. The U.S. economy has changed dramatically since 1959, but the guidance found in the Ruling, by and large, still matters.
We trust you will enjoy this short tour through Revenue Ruling 59-60. We have been referring to, questioning, interpreting, and relying on the Ruling’s insights and guidance for over 25 years, and we anticipate continuing to benefit from the practical wisdom found in it for years to come.
Revenue Ruling 59-60 at 50 is approximately 125 pages, paperback, 6x9" and retails for $50 plus $7 s/h. It is written for attorneys, CPAs, and businessappraisers. To order your copy, click here.