Determining FMV.

• Author: Laffie, Lesli S.
• Position: From The IRS

Rev. Proc. 2003-51 sets forth guidelines that taxpayers and the IRS can use in making fair market value (FMV) determinations for inventory items acquired when a taxpayer purchases the assets of a business for a lump sum, or a corporation acquires the stock of another and makes a Sec. 338 election.

The procedure offers three basic methods a taxpayer may use to determine the inventory's FMV: the replacement-cost method, the comparative-sales method and the income method. Generally, the procedure is effective for tax years ending after April 24, 1977.

EINs

According to IR 2003-77, the IRS now allows businesses to obtain employer identification numbers (EINs) directly from its website. After the application form is completed online, the system issues an EIN that may be used immediately.

The online process eliminates the need to send paperwork to the IRS, as well as the delay that may result from an incomplete application. Once a business has an EIN, it can file tax returns and may enroll in the Electronic Federal Tax Payment System to handle its payments.

Businesses do not need to pre-register before requesting an EIN. The number issued is the business's permanent EIN, unless the IRS finds that it has already issued an EIN for that business or if the principal officer's name and Social Security number do not match Social Security records. In such cases, the IRS will void the number issued through the website and notify the business.

A CPA may use the website at www.irs.gov to request EINs on a client's behalf. The taxpayer must sign a copy of Form SS-4, Application for Employer Identification Number, and a statement authorizing the representative to receive the number online. The representative must keep both documents on file. The website describes the elements required for an authorization statement, which a preparer may print out for a client to sign.

The online application process is not available to some EIN requestors, including Federal, state or local government agencies, Indian tribal governments, real estate mortgage investment conduits and taxpayers with addresses outside the U.S.

For more information, go to www. irs.gov/smallbiz and click on the "Online Application--Form SS-4" link.

Businesses may still obtain EINs by phoning (800) 829-4933 from 7:30 a.m. to 5:30 p.m. (local time), or by mailing or faxing Form SS-4, as provided in the form's instructions.

Sec. 355 Rulings

Rev. Proc. 2003-48 modifies the procedure for obtaining a...