Certified Valuation Analyst (CVA) Practice Exam

Match the engagement types with their appropriate valuation methods. Tax engagements require what valuation method?

1. Calculated Value

2. Conclusion of Value

3. Market Value Adjustments

4. Intrinsic Value

The correct answer is: Conclusion of Value

Tax engagements often require a Conclusion of Value because they necessitate a definitive determination of an asset's value for purposes such as gift tax compliance, estate tax assessments, or similar obligatory reporting to tax authorities. This form of valuation provides a clear and supported conclusion based on relevant guidelines, making it suitable for tax purposes where specificity and adherence to established standards are vital. Other methods mentioned may not be as appropriate in this context. Calculated Value might not provide the comprehensive conclusion required for tax purposes, as it often involves an internal estimate rather than an objective market-based valuation. Market Value Adjustments and Intrinsic Value focus on different valuation perspectives, such as current market conditions or fundamental value assessments. These approaches may not offer the clarity or authoritative backing needed for tax engagement, which is why the Conclusion of Value is the most suitable method.