Certified Valuation Analyst (CVA) Practice Exam

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Which Revenue Ruling addresses the valuation of restricted stock?

  1. 77-287

  2. 78-141

  3. 2001-312

  4. 87-163

The correct answer is: 77-287

The revenue ruling that addresses the valuation of restricted stock is 77-287. This ruling provides important guidance on the valuation process specifically for stocks that come with restrictions on transferability, typically due to regulatory compliance or company policies. In this context, the ruling helps practitioners understand how to properly discount for lack of marketability and takes into account the restrictions that can affect the stock's value. By establishing a framework for assessing restricted stock, Revenue Ruling 77-287 aids analysts in appropriately determining the fair value of such investments, which is critical for financial reporting, tax purposes, and various business transactions. The other rulings mentioned discuss different aspects of valuation or tax issues, but none focus specifically on the nuances of valuating restricted stock, making 77-287 the most relevant choice in this situation.