When you gift stock to a QSBS trust, the IRS requires a defensible fair market value for your shares. Promissory coordinates this for you with a thorough, audit-ready valuation report included in your trust setup.
This isn’t a formality. It’s your first line of defense.
When you transfer stock into a QSBS trust, you’re making a gift. The IRS requires you to document the value of that gift — and document it in a way that will hold up if ever questioned, whether by the IRS or by an acquiring company’s legal team during M&A.
A weak or missing valuation isn’t just a filing problem. It can jeopardize your QSBS exclusion, create gift tax exposure, and complicate your exit.
That’s why every Promissory trust setup includes a gift and estate valuation performed to IRS standards — comprehensive, defensible, and built to last.
What’s at stake without a proper valuation:
IRS Exposure
Without an audit-defensible report, your gift tax filing has no substantiation. The IRS can challenge the value, and the consequences flow through to your trust.
M&A Complications
Acquirers and their counsel will review how your trusts were funded. A proper valuation creates a clean paper trail. A missing one raises questions at the worst time.
Gift Tax Liability
If the reported share price is too low and the IRS disagrees, the difference may be treated as a taxable gift. A thorough valuation protects against this outcome.
What’s included
A complete report. Professionally prepared. Included in your setup.
Gift and estate valuations for QSBS trusts use a rigorous methodology — the same standard applied to 409A valuations, adapted specifically for IRS gift and estate tax purposes under IRC §2512 and Revenue Ruling 59-60.
Fair Market Value Determination
An analysis of your company’s value using accepted approaches — income, market, and asset — blended and weighted for your company’s stage and financial profile.
409A-Compatible Methodology
Conducted in accordance with AICPA Accounting & Valuation Guide standards, using market comparables, DCF analysis, and equity allocation methods for your capital structure.
Discount for Lack of Marketability (DLOM)
Private company shares aren’t freely traded. Your report accounts for this with a properly calculated DLOM — a standard part of any defensible gift and estate valuation.
IRS-Ready Documentation
Prepared specifically for submission to the IRS in connection with Form 709 (Gift Tax Return) and, if applicable, Form 706 (Estate Tax Return).
Form 709 Preparation
Promissory prepares your Gift Tax Return alongside the valuation — so you have both the report and the filing ready to go, not two separate engagements to coordinate.
M&A Due Diligence Package
The complete documentation package — valuation report, Form 709, transfer records — organized and ready for any due diligence request you receive at exit.
Why It Holds Up
Not all valuations are equal
A gift and estate valuation is only as useful as its defensibility. Here’s what separates a report that holds up from one that doesn’t.
Qualified Appraiser
The IRS requires valuations conducted by a qualified appraiser under IRS Regulation §1.170A-13(c)(5). Promissory’s valuations are prepared by certified professionals who meet this standard. Not software and not templates.
Correct Standard of Value
Gift and estate valuations must use the Fair Market Value standard as defined in Revenue Ruling 59-60: the price at which property would change hands between a willing buyer and a willing seller, neither under compulsion.
Purpose-Appropriate Methodology
This report is not a 409A for option pricing. The methodology, scope, and outputs are calibrated specifically for gift and estate reporting. It’s prepared to withstand that specific scrutiny.
Complete Documentation
A signed certification of appraiser independence and qualifications is included, along with the full analytical record supporting the conclusion. Nothing is missing if the IRS asks.
The Process
We coordinate the valuation. You review and sign off.
Step 1
Data collection
You upload the financial information and corporate documents needed: cap table, financials, funding history, articles of incorporation, and any relevant board materials.
Step 2
Valuation analysis
Our partner firm values your stock applies multiple approaches and weights them based on your company’s stage, revenue, and risk profile.
Step 3
Report delivery
You receive a complete and comprehensive valuation report with the FMV conclusion, full methodology, appraiser qualifications, and certification.
Step 4
Form 709 preparation
Promissory prepares your Gift Tax Return using the valuation as the basis for the reported gift value. Your complete documentation package is all ready to go.
Included with all trusts
No extra fees. No separate engagement.
The gift and estate valuation is included in your Promissory trust setup — part of the $3,500 setup fee that covers everything from trust drafting to Nevada custody.
You don’t have to coordinate with a separate firm, negotiate a separate engagement, or worry about whether the report meets the right standard. Everything is handled.
Most founders complete setup in 2–4 weeks. Compare this to 3–6 months with traditional estate attorneys who often charge $30K–$60K+ for comparable QSBS planning.
FAQs
Common questions about gift and estate valuations
Why is a valuation required when I gift stock to a trust?
When you transfer stock to a trust, you’re making a taxable gift in the eyes of the IRS. You’re required to report it on Form 709 and substantiate the value of the shares gifted. Without a qualified appraisal, you have no defense if the IRS challenges the value.
Is this the same as a 409A valuation?
No, though they share similar methodology. A 409A valuation is for equity compensation and option pricing purposes. A gift and estate valuation is conducted specifically for gift and estate tax reporting, under IRC §2512 and Revenue Ruling 59-60. The standard of value, scope, and use of the report are distinct.
What if I already have a recent 409A?
A standard 409A doesn’t satisfy the gift and estate valuation requirement. It was prepared for a different purpose under a different standard. A new report, prepared specifically for gift and estate purposes, is required for your Form 709.
How detailed is the report?
Very. The comprehensive report covers your company’s financial analysis, market analysis, industry and competition, valuation approaches (income, market, asset), equity allocation methodology, and DLOM analysis. It also includes the conclusion, assumptions, appraiser qualifications, and certification.
What happens if the IRS challenges the valuation?
A properly prepared report by a qualified appraiser under the correct standard is your strongest defense. Our reports include full methodology documentation, appraiser certification, and supporting analysis — everything needed to substantiate the conclusion.
What if my share price has already increased significantly?
The valuation is dated to the date of the gift. The sooner you act, the lower your reported gift value and the more appreciation is captured inside the trust. If your share price has risen substantially, it’s worth having a consultation to determine whether QSBS trusts still make sense for your situation.
Is the valuation good for future gifts to the same trust?
Each separate gift requires its own valuation as of the date of that gift. If you transfer additional shares later, a new valuation and Form 709 are required.
Protect your equity. Maximize your outcome.
The decisions you make now determine what you keep.
