- 13 - $100 million ($8,432,007 divided by 8.5 percent equals $99,200,082, rounded to $100 million). Petitioner's expert chooses the 8.5-percent capitalization rate from the 5.9- to 9.2- percent capitalization range reflected in the 1988 C&W report. In his opinion, use of a high capitalization rate (namely, 8.5 percent) is particularly appropriate because of the economic recession and poor commercial real estate environment that existed in New York City in December of 1989. From the $100 million estimated fair market value of the Partnership Properties, petitioner's expert then subtracts FC Partnership liabilities of $41,595,787 and calculates a net liquidation value for the FC Partnership of $58,404,213 and a pre-discount net liquidation value for each ownership unit in the FC Partnership of $614,781 (1/95 of $58,404,213 equals $614,781). In determining his combined minority and lack-of- marketability discounts of 67.5 percent, petitioner's expert relies primarily on a July 1989 sale to Mr. Silver for $125,000 of a fractional 62.5-percent interest in a single ownership unit in the FC Partnership. Petitioner's expert calculates that the $125,000 sale price for a 62.5-percent interest in a single ownership unit reflected a 67.5-percent discount from the $614,781 liquidation value of a single ownership unit.1 1 In December of 1985, two individuals inherited ownership of fractional interests in a single ownership unit in the FC (continued...)Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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