-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.
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