Business Valuation Appraisal for Estate Tax

Business Valuation Appraisals for Estate Tax

When a decedent's estate includes an ownership interest in a closely held business, that interest must be reported at fair market value on IRS Form 706 if the gross estate exceeds the federal filing threshold. Under IRC Section 2031 and Revenue Ruling 59-60, executors are required to substantiate value using a qualified appraisal prepared by a credentialed, independent appraiser. Our business valuation practice covers the full range of privately held interests, from sole proprietorships and family partnerships to multi-member LLCs and closely held corporations, applying income, market, and asset-based approaches as required.

AppraiseItNow delivers these valuations both online and onsite across the United States. Our appraisers meet IRS qualified appraiser standards and hold credentials from recognized professional organizations including ASA and AMEA. Whether you need support for a straightforward single-owner business or a complex entity with minority interest discounts, our estate tax valuation services are built to withstand IRS scrutiny. Our mission is to deliver defensible, USPAP-compliant valuations with exceptional speed, professionalism, and client service.

Business Interests We Appraise for Estate Tax

AppraiseItNow appraises a wide range of business ownership interests that commonly appear in taxable estates, including:

• Closely held C corporations with no publicly traded shares
• S corporation interests, including minority and majority ownership stakes
• Family limited partnerships (FLPs) and family limited liability companies (FLLCs)
• Multi-member LLC interests subject to operating agreement restrictions
• Sole proprietorships with identifiable goodwill and tangible assets
• Professional practices including medical, dental, legal, and accounting firms
• Holding companies with real property, securities, or operating subsidiaries
• Franchise businesses with assignable or non-assignable license agreements
• Interests in joint ventures or co-owned operating entities
• Partial interests subject to lack-of-control or lack-of-marketability discounts

How AppraiseItNow Approaches Business Valuations for Estate Tax

Our process and deliverables are designed to meet IRS requirements and support executors, estate attorneys, and CPAs throughout the Form 706 filing process.

• Appraisers analyze all three valuation approaches, income, market, and asset-based, as required under Revenue Ruling 59-60, and document the rationale for any approach that is weighted or excluded in the final conclusion.
• Reports address the specific factors IRS examiners review, including earning capacity, asset composition, goodwill, industry conditions, and any applied discounts for lack of control or marketability, with full supporting documentation.
• The completed appraisal is a written, signed qualified appraisal report that identifies the valuation date (date of death or alternate valuation date), the standard of value used, and the appraiser's qualifications, formatted to attach to Form 706 or Form 709 as applicable.
• Our appraisers are credentialed through organizations such as ASA and AMEA, carry verifiable experience in closely held business valuation, and operate independently of the estate to satisfy IRS qualified appraiser requirements.

What does a business valuation appraisal for estate tax involve?

A business valuation appraisal for estate tax is a detailed, written professional assessment of the fair market value of a closely held or non-publicly traded business interest as of the date of the decedent's death. The appraiser analyzes the business using income, market, and asset-based valuation methods, applying the factors outlined in Revenue Ruling 59-60, and documents any discounts for lack of control or marketability claimed on the estate tax return. The completed report supports the values reported on Form 706 and provides a defensible record in the event of IRS review.

When is a business valuation appraisal required for estate tax purposes?

A business valuation appraisal is required when a decedent's gross estate includes interests in closely held or non-publicly traded businesses and the total estate value exceeds the federal filing threshold, which is $13,990,000 for 2025. The executor must report all business interests at fair market value on Form 706, and a qualified appraisal is needed to substantiate that value and defend against IRS challenge. Even estates below the filing threshold may benefit from an appraisal for succession planning or to document fair market value when substantial lifetime gifts were involved.

What credentials should the appraiser have?

The appraiser must be independent and hold verifiable education and professional experience in business valuation, typically through credentials such as ASA (American Society of Appraisers), CVA (Certified Valuation Analyst), or ABV (Accredited in Business Valuation). AppraiseItNow appraisers are credentialed through recognized professional bodies including ISA, ASA, AAA, CAGA, AMEA, and NEBB, and are experienced in tax code compliance and Revenue Ruling 59-60. The appraiser must also have no financial interest in the outcome and be free from conflicts of interest.

How is a business valued for estate tax purposes?

Business valuation for estate tax uses the fair market value standard under IRC Section 2031, requiring analysis of three approaches: income-based (discounted cash flow or earnings multiples), market-based (guideline public companies or comparable transactions), and asset-based (tangible and intangible assets minus liabilities, including goodwill). The valuation date is the date of death unless the executor elects alternate valuation six months after death. The appraisal must document factors such as earning capacity, asset composition, business condition, management depth, and industry outlook as required by Revenue Ruling 59-60.

Are AppraiseItNow's appraisals USPAP-compliant?

Yes, all AppraiseItNow business valuation appraisals are fully USPAP-compliant and prepared to IRS qualified appraisal standards, including proper valuation date documentation, methodology disclosure, appraiser credentials, and a non-contingent fee declaration. These standards are specifically required for estate tax filings and help ensure the appraisal holds up under IRS scrutiny.

How long does a business valuation appraisal take?

Most business valuation engagements for estate tax are completed within 2 to 4 weeks from the time we receive all necessary financial records and documentation. Rush service is available upon request, with a turnaround of 7 to 10 days for time-sensitive estate filings.

What does a business valuation appraisal cost for estate tax purposes?

Estate tax business valuations fall under our Advanced Business Valuation category, with fees starting at $5,000 and a typical range of $7,500 to $12,000 based on past engagements. Higher complexity cases, such as those involving sophisticated financial structures or IRS-level scrutiny, can range from $15,000 to $20,000 or more. All fees are quoted as a fixed price before work begins, so there are no surprises. Key cost factors include:

• Scope and complexity of the business or assets being valued
• Quality and completeness of financial records provided
• Number of entities or interests included in the engagement
• Required valuation approaches and depth of market research

Visit our business appraisal page for more detail on how fees are structured.

Can you appraise businesses anywhere in the US?

Yes, AppraiseItNow provides business valuation appraisals for estate tax purposes nationwide. Our appraisers work with executors, estate attorneys, and tax professionals across all 50 states.

Will my appraisal be accepted by the IRS, insurers, or courts?

AppraiseItNow appraisals are prepared to qualified appraisal standards, including proper valuation date, documented methodology, appraiser credentials, and a non-contingent fee declaration, all of which are requirements the IRS looks for when reviewing estate tax filings. While no appraiser can guarantee acceptance in every case, following these standards significantly reduces audit risk and strengthens the estate's position if the return is examined. Courts and insurers also recognize qualified appraisals as credible evidence, making a well-documented report valuable beyond the initial filing.

When does an estate need a business valuation appraisal for Form 706 filing?

An estate needs a business valuation appraisal when the decedent's gross estate includes closely held or non-publicly traded business interests and the total estate value exceeds the federal filing threshold. The executor must substantiate the reported fair market value on Schedule F of Form 706 with a qualified appraisal, and estates below the threshold may still benefit from one for succession planning or gift tax documentation purposes.

What does Revenue Ruling 59-60 require for estate tax business valuations?

Revenue Ruling 59-60 is the primary IRS framework for valuing closely held businesses and mandates consideration of eight factors, including the nature and history of the business, economic and industry outlook, book value, earning capacity, dividend-paying capacity, goodwill and intangible assets, comparable transactions, and guideline public company data. Appraisers must analyze all three valuation approaches and document how each factor influences the final fair market value conclusion. Failure to address these factors invites IRS challenge and increases audit risk.

Do appraisers have to use all three valuation methods for estate tax business appraisals?

Yes, appraisers must analyze income-based, market-based, and asset-based methods even if the final value conclusion relies primarily on one or two approaches. The IRS expects a clear explanation of why certain methods were weighted more heavily or excluded, and omitting any approach without justification can trigger scrutiny. The IRS generally favors guideline public company data where available, but all three methods carry equal validity when properly documented.

Why is a written appraisal required rather than an oral opinion for estate tax filings?

Form 706 and IRS regulations require a detailed, written qualified appraisal that documents the appraiser's methodology, data sources, and analysis of all Revenue Ruling 59-60 factors. A written report provides a defensible record in the event of an audit and allows the executor and tax professionals to substantiate the reported fair market value. Oral opinions leave no documentation trail and do not meet the IRS's qualified appraisal requirement, exposing the estate to penalties and valuation understatement challenges.

How are discounts for lack of control or marketability documented on estate tax forms?

Discounts for lack of control and lack of marketability must be fully documented in the qualified appraisal report, which is attached to Form 706 or incorporated by reference. The appraisal must explain the discount methodology, cite supporting transaction data or guideline company analysis, and reconcile the discount with Revenue Ruling 59-60 factors. Undocumented or unsupported discounts invite IRS challenge, and the IRS scrutinizes family transactions with particular care.

What is the deadline for completing a business valuation appraisal after someone dies?

The appraisal must be completed by the time Form 706 is filed, which is due nine months after the date of death, with extensions available that do not change the valuation date itself. Because the valuation date is fixed at the date of death (or six months later if the executor elects alternate valuation), the appraisal should be initiated promptly to allow adequate time for review and filing. Delaying the appraisal risks missing the filing deadline and can result in penalties, interest, and complications in estate administration.