CCA 200937034: The asset-valuation rules provide an analogy for valuing acquired stock and assets

Plain-English summary

Chief Counsel offered an analogy for valuing stock acquired as part of an acquisition. The advice states that acquiring the stock of an entity is the acquisition of financial assets rather than tangible or intangible assets. It adds that, if a taxpayer purchased the assets of one entity and the stock of another, the Service would use the rules referred to as “1.167” to examine the valuation of both the stock and the individual assets.

Ruling snapshot

• Question: What valuation approach could be used when an acquisition includes both an entity's assets and another entity's stock?
• Outcome: Advice given.
• Key authorities: IRC § 167; Treas. Reg. § 1.167.

Full text (IRS public release)

ID: CCA-318164-09 Number: 200937034
Release Date: 9/11/2009
Office: ----------------
UILC: 167.07-00

From: --------------------
Sent: Wed 3/18/2009 4:45 PM
To: ---------------------------------------------------------
Cc: ---------------------
Subject: RE: Legal argument - ------

-Although not directly on point, the 1.167 is a good analogy, as the acquisition of the stock of entities is the acquisition of assets - financial assets, rather than tangible/intangible assets. If a t/p had purchased assets of one entity and the stock of another, we were certainly use 1.167 to look at the valuation of both the stock and the individual assets.
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