ABV Practice Test 2026 – Complete Resource for Exam Preparation

Revenue Ruling 77-287 specifically addresses the discount for lack of marketability (DLOM) applicable to unregistered shares. This ruling illustrates how certain factors may lead to a valuation adjustment when assessing the worth of shares that are not readily marketable. It provides guidance on the circumstances under which a lack of marketability might warrant a discount, which is crucial for valuators to consider when valuing private stocks or shares that are not publicly traded.

This ruling is particularly significant in the context of business valuation because it helps valuators understand the rationale behind applying a DLOM, thus informing their assessment of a business’s value when dealing with investments that cannot be easily liquidated. By establishing a precedent, this ruling helps ensure consistency in valuations that involve these types of shares, ensuring a more accurate reflection of their market value.