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sum the present value of cash-flows expected after year 5 (the
reversion). We agree with respondent’s corrected computation of
the present value of the reversion.
Also, we are satisfied with his use of the market approach.
Indeed, three of the companies selected by Spiro as comparable
were selected by Klemm in his initial report, which accompanied
the estate tax return.
We agree with Spiro’s application of a liquidity discount of
10 percent. We also agree with the weight he gave the results
reached under the two approaches.
B. Petitioner’s Criticism
Petitioner has criticized Spiro’s testimony on numerous
grounds. Implicitly, we have dealt with most of that criticism
in our analysis of Spiro’s report. We have not, however, dealt
with petitioner’s claim that Spiro failed to recognize the effect
on the value of the shares of the June 9, 1986, technology
sharing agreement (agreement) entered into with Monolithic
Memories, Inc. (MMI). The agreement was terminated in 1990. The
agreement, argues petitioner, decreased the corporation’s
earnings potential (and therefore decreased the value of the
corporation) because MMI (and later its successor, AMD) could
produce and sell, at lower prices, products using the
corporation’s technology.
We do not think that Spiro failed to take the agreement into
account. The pace of change for technology in the computer
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