Certified Valuation Analyst (CVA) Practice Exam

Which of the following statements is NOT included in Revenue Ruling 59-60?

1. Use common sense, judgment, and reasonableness

2. Valuation must be based on the facts available at the required date of appraisal

3. Valuation of securities is a prophecy as to the future

4. Consideration of tax implications for valuation

The correct answer is: Consideration of tax implications for valuation

The statement that is not included in Revenue Ruling 59-60 is related to the consideration of tax implications for valuation. Revenue Ruling 59-60 focuses on how to properly value capital stock for purposes of gift and estate tax matters. While the ruling emphasizes the importance of applying common sense, judgment, and reasonableness and insists on basing valuations on the facts available as of the appraisal date, it does not directly address or mandate consideration of tax implications in the valuation process itself. This ruling outlines a framework for valuing securities, making it clear that appraisals should reflect the current market realities and be grounded in factual data rather than predictions about future performance. The understanding of securities valuation emphasized in this ruling prioritizes accuracy based on existing information rather than speculative forecasting, which is why the notion that it constitutes a prophecy about future value does not align with the ruling's intent. Consequently, while tax implications are certainly a consideration for practitioners, they are not specified as a requirement within the context of Revenue Ruling 59-60. Thus, the consideration of tax implications for valuation stands out as the statement that does not belong to the core principles laid out in that ruling.