Does Your Account Require a Fair Market Valuation? Here’s How to Complete It

By Equity Trust Staff5 Comments

If you hold non-traditional investments in an IRA or other account, the IRS requires you to perform a fair market valuation for these assets annually.

To perform the valuation, you’ll need to complete a Fair Market Valuation Form, which can be found here. The form needs to be provided to the third-party valuator to complete, sign and notarize.

Please note: third-party valuator cannot be yourself or an entity that you are affiliated with, and should be someone that has the competency and experience to perform such valuations.

Real Property Valuations (3 Options):
  1. Request that a broker or other certified third party complete the Fair Market Valuation Form. This form does require a notary and signature by both the valuator and client. Note, the valuator and client are attesting to that this is the true representation of the value of the account.
  2. Order a Broker Price Opinion (BPO) and send to Equity Trust in addition to a Fair Market Valuation Form.  (Note:  Valuation must be exact and cannot be a range or estimation.)
  3. Order a Certified Market Analysis (CMA) and send to Equity Trust in addition to a Fair Market Valuation Form.  (Note:  Valuation must be exact and cannot be a range or estimation.) 
Notes (Secured and Unsecured):
  1. If the value of the note is the unpaid balance of the loan, submit a letter of instruction (LOI) that simply indicates the current unpaid balance, per the repayment terms.  If the note is amortized, include the amortization schedule.
  2. If the note is secured and the collateral has been collected, reach out to your First Class Service team to complete the exchange of the asset.  
  3. If the note is secured, borrower cannot pay-off the loan, and the collateral cannot be collected, provide:
    1. A fully completed Fair Market Valuation Form OR partially completed Fair Market Valuation Form with supporting documentation;
    2. Supporting documentation of collection attempts.
  4. Unsecured: If the value of the note is worthless, you will need to submit the Unsecured Uncollectible Note form with supporting documentation of collection attempts.
LLC/Corp/Trusts/Other Entities:
  1. Request the manager or officer of the company perform the fair market valuation of the accounts interest in the company and submit to Equity Trust via the Fair Market Valuation Form.
  2. If the company produces quarterly or annual statements, this can be accepted in lieu of the Fair Market Valuation Form.
Please note: The annual K-1 filing for these entities cannot be used as the updated valuation.

All actions and documentation is subject to review and approval.
 
If you have any questions, call 888-382-4727 to speak to an Equity Trust client service respresentative.