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elected to use a factor of 1.5, which he derived by splitting the
difference between two factors used in recent valuation projects
involving insurance companies with which he was familiar. Willis
further testified that he was unfamiliar with the use of minority
interest discount factors in conducting appraisals. In fact,
Willis had never before valued a minority block of shares. While
neither of these two matters alone is sufficient to cause us to
conclude that Willis was unqualified to appraise the 1988 stock
transfer, when they are coupled and viewed in conjunction with
his unfamiliarity with relevant revenue rulings and Treasury
regulations, we are inclined to question his appraisal skills.
Simply splitting the difference between two premium increase
factors seems to be a rather arbitrary way to calculate a
critical variable. Additionally, it seems to us unusual that an
individual who represents himself to be an expert appraiser lacks
familiarity with a concept as common as minority interest
discounts. Accordingly, in light of his questionable skills as
an appraiser, the efficacy of Willis’ model is suspect.
Petitioners argue in support of Chaffe’s result by pointing
to a redemption of RLIC stock that occurred in 1984. Petitioners
maintain that in 1984 RLIC redeemed 5,000 shares of its stock
from Mr. Rabenhorst’s two cousins at a redemption price of
$137.50. The redeemed shares were immediately distributed in the
form of a stock dividend, and, as a result, the total number of
issued and outstanding shares remained unchanged before and after
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