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Johnson concluded that CSB was worth $5,200,000 on June 30,
1988; 71.43 percent of that amount is $3,714,000. Johnson said
that use of a control premium of 15 percent to value decedent’s
CSB stock would be appropriate, but he said that he took a more
conservative approach and did not apply a control premium.
Johnson said that by not applying a premium he might be
understating the value of decedent’s stock. Johnson estimated
that, if he used a 15-percent control premium to value decedent’s
stock, the value would be $4,217,000. Petitioner contends that
a 25-percent control premium should have been used, which would
increase the value of decedent’s stock to $4,642,500.
Contrary to Johnson’s conclusion, we do not think a
hypothetical willing buyer would pay anything close to $5 million
for decedent’s CSB stock. CSB did not pay dividends. Decedent
could not sell his CSB stock without the other shareholders’
consent. Ownership of CSB stock did not entitle the shareholder
to any CSB earnings or profits. There was no relationship
between stock ownership in CSB and compensation. Also, the
nature of CSB’s personal injury contingency fee practice was
uncertain.
Prior sales of CSB stock by Fowler and Sucherman suggest
that decedent’s stock was worth less than $1,105,762 (about $110
per share). CSB agreed to pay $25 per share to Fowler and $46
per share to Sucherman (after offsetting for the costs advanced
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