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$35,273,000 to $32,387,730, or from $72.36 per share to $66.45
per share ($32,387,730 � 487,440 = $66.45).5
Respondent’s expert’s revised valuation of the estate’s TPC
stock interest was necessitated by errors in his original report.
In his original valuation, respondent’s expert had added back to
his calculation of TPC’s 1997 cashflow (which was the basis for
his TPC cashflow estimates for 1998-2002) deferred income taxes
of $13,294,000, although the correct amount of deferred taxes
that should have been added back to TPC’s 1997 cashflow was only
$1,609,793.
Also shortly before trial, the estate’s experts prepared an
“updated” or revised valuation report to make the estate’s
original report “more readable”, in which revised report the
estate’s experts again opined that the May 2, 1998, date-of-death
value of the estate’s TPC common stock was $1,750,000, or $3.59
per share.
OPINION
Generally, under section 2031(a) the value of a decedent’s
gross estate is based on the fair market value of property owned
by the decedent on the date of death. For Federal estate tax
purposes, the term “fair market value” is defined as the price at
which property would change hands between a willing buyer and a
5 Based on this adjustment, respondent reduced the estate’s
tax deficiency to $16,326,408 and the accuracy-related penalty to
$6,530,563.
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