Introduction

This article will briefly define Par Value and Fair Market Value. It will provide clarity into their differences and will direct you to our blog posts where you can learn more! Although the two terms are often conflated, Par Value is different from Fair Market Value.

What Is Par Value?

Par Value is the lowest amount for which a share of stock can be sold by the company according to applicable state law. It is established at the point of company incorporation in Delaware and represents the stock value stated in the corporate charter. The par value of a company almost never changes. It is usually set to a fraction of a cent (like $.0001). The par value will also appear as the per share amount on stock certificates. Learn more about par value and how it is determined in our blog post, "Par Value: More Than Zero."

What Is Fair Market Value (FMV)?

The Fair Market Value per share is the price of each individual share, which is determined by the overall value of your company and changes over time as your company becomes more or less valuable. Whereas your stock certificate will state par value, your 83(b) election will state your fair market value.

Example of the platform using your fair market value for your 83(b):