CVA Exam Study Guide Questions with
Correct Answers
Primary opportunities for the valuation analyst can be found in working with: - Answer-Business
owners, investors, attorneys, and individuals performing valuations for a variety of reasons including
estate planning and taxation, litigation support, mergers and acquisitions, and financial statement
reporting
Appraisal vs. Valuation - Answer-appraisal = tangible
Valuation = stock or interest in stock of company or another intangible
Risk management in the valuation niche demands solid training and staying current rhough continuing
education - Answer-TRUE
Buy/sell agreement - Answer-identifies when or what event trigger a buyout, identifies how any buyout
will be funded and identifies the timing of any buyout
Most commonly quoted regulatory and professional bodies for bvals - Answer-IRS, DOL and FASB
, 3 standards of value - Answer-Value described by an arm's length transaction involving a knowledgeable
willing buyer and seller
Valuation analyst must match the appropriate standard of value to the purpose because - Answer-The
valuation is to be used only for the purpose for which it was done and will likely be inappropriate for
another use even by the same company or client.
advocate vs valuator - Answer-advocate = subjective
valuator = objective
3 main reasons for tax valuations - Answer-estate, gift and allocation of purchase pricec
American Medical Association refers to going concern value as an in-place value - Answer-TRUE
major points of internal revenue code 2703 - Answer-1. For estate, gift and other tax purposes, the
value of any property is determined without regard to any right or restriction relating to the property
2. An exception to restrictions on property exists for any option, agreement, right or restriction which (1)
is a bona fide business arrangement, (2) is not a device to transfer property for less than its fair market
value, (3) is comparable to similar arm's length arrangements; and (4) these safe harbors must be
independently satisfied. The mere showing that a right or restriction to property is a bona fide business
arrangement is not sufficient to establish the absence of a device
3. Each right or restriction must be tested separately. A right or restriction is considered to meet the
three 'safe harbor' requirements if more than 50% of the applicable property is owned by individuals
who are not members of the transferor's family. Property owned by non-family members must be
subject to the same rights or restriction
Correct Answers
Primary opportunities for the valuation analyst can be found in working with: - Answer-Business
owners, investors, attorneys, and individuals performing valuations for a variety of reasons including
estate planning and taxation, litigation support, mergers and acquisitions, and financial statement
reporting
Appraisal vs. Valuation - Answer-appraisal = tangible
Valuation = stock or interest in stock of company or another intangible
Risk management in the valuation niche demands solid training and staying current rhough continuing
education - Answer-TRUE
Buy/sell agreement - Answer-identifies when or what event trigger a buyout, identifies how any buyout
will be funded and identifies the timing of any buyout
Most commonly quoted regulatory and professional bodies for bvals - Answer-IRS, DOL and FASB
, 3 standards of value - Answer-Value described by an arm's length transaction involving a knowledgeable
willing buyer and seller
Valuation analyst must match the appropriate standard of value to the purpose because - Answer-The
valuation is to be used only for the purpose for which it was done and will likely be inappropriate for
another use even by the same company or client.
advocate vs valuator - Answer-advocate = subjective
valuator = objective
3 main reasons for tax valuations - Answer-estate, gift and allocation of purchase pricec
American Medical Association refers to going concern value as an in-place value - Answer-TRUE
major points of internal revenue code 2703 - Answer-1. For estate, gift and other tax purposes, the
value of any property is determined without regard to any right or restriction relating to the property
2. An exception to restrictions on property exists for any option, agreement, right or restriction which (1)
is a bona fide business arrangement, (2) is not a device to transfer property for less than its fair market
value, (3) is comparable to similar arm's length arrangements; and (4) these safe harbors must be
independently satisfied. The mere showing that a right or restriction to property is a bona fide business
arrangement is not sufficient to establish the absence of a device
3. Each right or restriction must be tested separately. A right or restriction is considered to meet the
three 'safe harbor' requirements if more than 50% of the applicable property is owned by individuals
who are not members of the transferor's family. Property owned by non-family members must be
subject to the same rights or restriction
