The Bureau of Internal Revenue recently issued RR No. 20-2020 which effectively repealed the adjusted net assets method in computing the fair market value of shares of stock.

Prior to the issuance of RR No. 20-2020, when selling shares of stock not traded in stock exchange, the selling price must at least be the fair value of the shares (otherwise it will be considered a donation). In order to establish the fair value of the shares, the company and its real estate properties had to be appraised.

With the issuance of RR No. 20-2020, the fair market value is now equal to its book value per share based on its latest audited financial statements.