LO.3 In determining the value of goodwill attributable to stock in a closely held corporation, comment on the following factors.

a. The corporation’s average profit figure includes large gains from the sale of assets not related to the business conducted.

b. The operations of the corporation are largely financed with loans from its shareholders

(rather than from outsiders).

c. The rate of return used by the IRS for this type of business is too low.

d. The deceased owner was active in the operation of the business.