Tax Reporting Valuations

409A Valuations

Determination of the fair market value (FMV) of private company common stock for equity award issuances.

Section 409A of the Internal Revenue Code governs the taxation of nonqualified deferred compensation, including stock options and other equity awards. To ensure compliance, companies are required to determine the fair market value (FMV) of their common stock at the time of granting equity awards.

409A valuations consider a combination of quantitative and qualitative factors, including company financial performance, market conditions, stage of development, capital structure, and recent financing transactions. Methodologies commonly include the income approach (discounted cash flow), the market approach (comparables), and option-pricing models for convertible or complex instruments. The valuation must be reasonable and defensible to avoid adverse tax consequences for both the company and its employees.

Rivem Consulting assists clients in preparing 409A valuations, providing thorough analyses, well-supported documentation, and practical guidance to help companies maintain compliance with IRS regulations and support equity compensation programs.

Estate & Gift Tax Planning

Fair market value analyses prepared in accordance with IRS and U.S. Treasury standards for estate planning and transfer tax reporting.

Rivem Consulting provides expert valuation services for estate and gift tax planning, helping clients navigate complex financial and regulatory requirements. Our services are designed to support accurate reporting and informed decision-making, whether for the transfer of business interests or other assets. Leveraging deep technical expertise, we apply rigorous valuation methodologies—including income, market, and asset-based approaches—while considering control or lack of control, lack of marketability, and other key factors that influence value. In addition, we provide discount studies. All engagements are performed in accordance with IRS guidelines, Treasury regulations, and established industry standards, ensuring defensible results under the most critical reviews. By combining technical precision with practical insight, we help clients structure transactions and plan transfers efficiently while minimizing risk and maximizing compliance.

ESOP Valuation Services

Annual and transactional valuations for employee stock ownership plans, trustees, and fiduciaries.

Employee Stock Ownership Plans (ESOPs) are an effective way for companies to align employee incentives with long-term shareholder value while providing liquidity and succession planning options for business owners. Because ESOPs are subject to specific regulatory and fiduciary requirements, an independent and well-supported valuation is essential.

ESOP valuations are typically performed annually to determine the fair market value (FMV) of company shares for transactions, annual updates, or plan administration. The valuation process considers a range of factors—including company performance, industry conditions, capital structure, and market comparables—to ensure fairness and compliance with Department of Labor (DOL) and IRS guidelines.

Rivem Consulting provides independent ESOP valuation services for plan sponsors, trustees, and fiduciaries, delivering comprehensive analyses and documentation that meet regulatory standards and withstand audit or review. Our team combines valuation expertise with a deep understanding of ESOP structures to support clients through initial transactions and ongoing annual updates.

Purchase Price Allocation – Tax Purposes (IRC Sections 1060 and 338)

Allocation of purchase consideration for tax basis step-ups and reporting compliance, including support for Section 338 elections.

Following a merger or acquisition, companies are required to allocate the purchase price among the acquired tangible and intangible assets and liabilities for tax reporting purposes. A well-supported purchase price allocation (PPA) ensures compliance with IRC Section 1060 and related tax regulations while optimizing tax positions and reducing audit exposure.

Under Section 1060, the total purchase consideration is allocated across specific asset classes using the residual method, assigning value to identifiable assets such as working capital, fixed assets, customer relationships, intellectual property, tradenames, and goodwill. This allocation directly impacts future depreciation, amortization, deferred tax assets, and gain or loss recognition upon subsequent sale.

Rivem Consulting assists clients with tax-based purchase price allocations and Section 338 analyses, providing defensible valuations that meet IRS requirements and align with both financial reporting (ASC 805 / IFRS 3) and tax compliance standards.