-6- discount taken in determining the value of the Company's shares when the 1986, 1987, and 1988 gifts were made to the Thompson children. Respondent's examining agent made his own computation of the value of the Company stock. The agent, using what he considered to be a comparable publicly traded corporation, determined in his report that the hypothetical market value of the Company on the valuation date was $300 per share. He then discounted that value by 20 percent, or $60 per share, to reflect the lack of marketability of closely held stock. To the discounted value of $240 he applied a "control"7 premium of 20 percent, or $48, which he added to the marketability discounted value of $240 to arrive at a figure of $288 per share. Finally, he rounded to the amount of $285 as his proposed per-share value of the Company stock to a hypothetical buyer. In August of 1991, Mr. Thompson engaged attorney J. Ren� Hawkins (hereinafter Mr. Hawkins). In connection with representing Mr. Thompson in the examination of the gift tax return, Mr. Hawkins suggested that Mr. Thompson hire an independent appraiser to value the shares that Mr. Thompson had given to the children. Based upon this advice, Mr. Thompson hired John O. Batson (hereinafter Mr. Batson) to perform an appraisal of the Company stock. 7"Control" here represents ownership of more than 50 percent of the stock of a corporation by a single family.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
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