How to Value Stock for an Estate

Contact the decedent's financial adviser. As the financial adviser of the estate will not want the account assets to be distributed away from his firm, he will usually be amenable to any administrative task you ask of him during the valuation of estate assets. Combined with the additional resources that a financial services firm can offer, this is usually your best option for determining stock valuations for an estate. Make sure to submit a death certificate for the decedent and whatever trust or court paperwork authorizes you to administer the estate before making your request. In addition to the stock values on the date of the decedent's death, you also want to get the stock prices from six months after this date. Known as the 'alternate valuation date,' the Internal Revenue Service (IRS) allows executors to choose either of these two dates, whichever is more advantageous for tax purposes, when filling an estate tax return. The only restriction is that the net result of the alternate valuation selection must be a reduction in both the gross value of the estate and a reduction in the overall estate tax due.
Consult historical stock data. If you cannot obtain a value from the decedent's financial adviser, you can look up your own quotes to obtain both date-of-death and alternate valuation date prices. Historical charts and prices are available on a number of financial websites, including that run by the Financial Industry Regulatory Authority. For estate purposes, stock valuation is obtained by deriving an average of the high and low prices of a stock on the valuation date. For example, if a stock traded at a low of $21 per share and a high of $23 per share on the date of death (or alternate valuation date), the stock price for estate purposes would be $22 per share.
Use the decedent's statements. If a stock price is otherwise unavailable, you can use the average price listed on the two statements closest to the date of death to develop an estimate of a stock's value. Usually, stock prices are easy to obtain, but in the case of an illiquid or otherwise hard-to-trade stock, historical pricing data may be difficult to find. Although this is the least reliable method of stock valuation, the IRS allows an executor to estimate if prices are reasonably close to the valuation date.

How to Calculate Net Income Based on Stock Price

Visit any financial website that gives stock information and find a company’s P/E ratio, price per share and number of shares outstanding, which is information that a financial website provides for all public companies. For example, assume a company’s P/E ratio is 12, its price per share is $20 and it has 1 million shares outstanding.
Substitute the values into the P/E ratio formula: P/E ratio = price per share/(net income/shares outstanding). In this example, substitute the values to get 12 = $20/(net income/1 million).
Multiply both sides of the equation by the right side’s denominator. In this example, multiply both sides by (net income/1 million) to get 12 x (net income/1 million) = $20.
Divide the company’s P/E ratio by its total shares outstanding. In this example, divide 12 by 1 million to get 0.000012. This leaves 0.000012 x net income = $20.
Divide the company’s stock price per share by your result to calculate its net income over the past 12 months. In this example, divide $20 by 0.000012 to get approximately $1.7 million in net income over the past 12 months.