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If somebody gives me stock in a private corporation, how is that gift valued for the purposes of income tax? Assume the stock is unlisted and has no publicly tradable value.

I know that all stocks have a "par value" but usually for a private corporation that par value is nominal.

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  • Do you really mean gift tax, as your question is tagged? In the USA that is owed by the giver, not you (the recipient). For future income tax purposes, if the stock has appreciated between the giver's acquisition and the time of gift--as would be typical--you (the recipient) receive the giver's basis and the exact value at the time of gift is not relevant.
    – perimpossible
    Feb 25, 2020 at 19:24
  • @perimpossible Here is a scenario. Imagine if Ned Johnson, owner of Fidelity Investments, a private company worth billions of dollars gives 20% of the company as a gift to his daughter Abigail. Assume Fidelity stock is not traded, so it has no easily ascertainable specific value. How is that gift treated from a tax point of view?
    – Five Bagger
    Feb 25, 2020 at 19:28
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    The receiver of a gift never pays income tax on it, whether it's a private company, a public company, a famous painting, or anything else (including cash). For very valuable gifts, the giver may be responsible to pay a gift tax.
    – Daniel
    Feb 25, 2020 at 23:33
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    As for the value of the equity, private companies that offer stock options must file a 409a every 12 months. That is essentially an appraisal of the company, which determines the value of equity for tax purposes.
    – Daniel
    Feb 25, 2020 at 23:38
  • @perimpossible Is there ever any income involved, or just a capital gain (or loss) upon sale?
    – chepner
    Jul 26, 2020 at 13:27

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The book value of a company is approximately the shareholder's equity from the balance sheet.

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