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Respondent argues that neither Rev. Rul. 59-60, supra, nor
section 25.2512-2(f), Gift Tax Regs., requires that stock prices
of publicly traded companies be considered when valuing the stock
of a closely held corporation. Rather, respondent maintains,
consultation of such stock prices is unnecessary if alternative
appropriate means of valuation are available. Respondent
contends that Willis’ credentials and experience in the insurance
industry enabled him to prepare his appraisal without considering
stock prices of publicly traded companies. Particularly,
respondent maintains that Willis’ appraisal was benefited by
Willis’ “intimate familiarity” with the sale of industrial life
insurance companies located in Louisiana. In support of this
contention, respondent explains that Willis had completed an
appraisal, similar to the one in the instant case, for an
industrial life insurance firm located in Arkansas immediately
prior to being hired by David Rabenhorst to prepare the appraisal
involved in the instant case. In contrast, respondent’s argument
continues, Chaffe’s report lacks the benefit of such professional
experience. In fact, respondent explains, prior to preparing the
instant appraisal, Chaffe had never before prepared an appraisal
valuation of an industrial life insurance firm. Respondent also
explains that Chaffe’s report is inherently flawed because of the
dissimilarities between RLIC and the publicly traded life
insurance companies used as comparables in his report.
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Last modified: May 25, 2011