Valuation of partner's interest requires adding goodwill where asset rights exist and assessing consideration for profit-only shares. Valuation issues arise when partnership shares are allotted or altered without adequate consideration. Rights to both profits and assets require adding goodwill to the market value of assets when valuing transfers for gift tax purposes. Rights to profits only are to be valued by the capitalisation of income method as set out in the governing circular. The Gift tax Officer must assess whether a gift exists by examining consideration received by the transferee - capital, labour, or both - and determine its adequacy.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Valuation of partner's interest requires adding goodwill where asset rights exist and assessing consideration for profit-only shares.
Valuation issues arise when partnership shares are allotted or altered without adequate consideration. Rights to both profits and assets require adding goodwill to the market value of assets when valuing transfers for gift tax purposes. Rights to profits only are to be valued by the capitalisation of income method as set out in the governing circular. The Gift tax Officer must assess whether a gift exists by examining consideration received by the transferee - capital, labour, or both - and determine its adequacy.
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