5703-5-02 Date as of which the value of a taxpayer's issued and outstanding shares of stock is determined.

(A) This rule first applies for tax year 1990. It prescribes the date as of which the value of a taxpayer's issued and outstanding shares of stock is determined. The date for valuing a taxpayer's issued and outstanding shares is governed by the taxpayer's taxable year. Rule 5703-5-03 of the Administrative Code prescribes the dates on which a taxpayer's taxable year begins and ends. Rule 5703-5-01 of the Administrative Code defines terms used in this rule.

(B) The value of a taxpayer's issued and outstanding shares of stock under the net income basis shall be determined as of the end of the taxable year prescribed in rule 5703-5-03 of the Administrative Code. The determination of such value shall be based upon income for, and property, payroll, and sales during, the taxable year.

(C) The value of a taxpayer's issued and outstanding shares of stock under the net worth basis shall be determined as of the date immediately following the end of the taxable year prescribed in rule 5703-5-03 of the Administrative Code. The determination of such value shall be based upon net worth and property on the date following, and business done during, the taxable year.

(D) The following examples illustrate the application of this rule:

(1) CORP-A has a taxable year prescribed in rule 5703-5-03 of the Administrative Code that begins on July 1, 1988 and ends on June 30, 1989.

(a) For tax year 1990, the value of CORP-A's issued and outstanding shares of stock under the net income basis is based upon net income for, and property, payroll and sales during, the period July 1, 1988 to June 30, 1989.

(b) For tax year 1990, the value of CORP-A's issued and outstanding shares of stock under the net worth basis is based upon net worth and property on July 1, 1989 and business done during the period July 1, 1988 to June 30, 1989.

(2) CORP-B has a taxable year prescribed in rule 5703-5-03 of the Administrative Code that begins on January 1, 1989 and ends on December 31, 1989. CORP-B acquires business assets from an unrelated corporation in an acquisition effective immediately following the close of business on December 31, 1989. CORP-B's closing books and records as of December 31, 1989 do not reflect the acquisition, but its opening books and records as of January 1, 1990 do.

(a) For tax year 1990, the value of CORP-B's issued and outstanding shares of stock under the net income basis is based upon net income for, and property, payroll and sales during, 1989.

(b) For tax year 1990, the value of CORP-B's issued and outstanding shares of stock under the net worth basis is based upon net worth and property on January 1, 1990 and business done during 1989.

Replaces part of rule 5703-5-03 ; Eff 1-1-72; 12-30-89
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5733.031 , 5733.04 , 5733.05