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the valuation date. We are satisfied that the DCF method is a
viable means of determining the value of decedent's interest.
Although we accept that the DCF method is an appropriate
approach in the instant case, we have found weaknesses in
Zitelman's analysis. The DCF method generally requires
assumptions regarding the future revenue, operating costs, and
trends, see generally Estate of Cartwright v. Commissioner, T.C.
Memo. 1996-286, but some of Zitelman's assumptions are
unreasonable.
We are not convinced that the perceived risks cited by
Zitelman would depress the hypothetical purchase price as
significantly as petitioner would have us believe. Zitelman
correctly notes that the partnership agreement permits the
general partners to lend money to the estate of a deceased
partner, and obviously, in making such loans, the general
partners would be motivated in part by their family ties to the
deceased partner, but the partnership agreement also provides
that the deceased partner's interest in the partnership must
secure such a loan, and the loan must be at the prime rate or the
rate at which the partnership borrows the funds. Accordingly, we
do not see such lending as particularly jeopardizing the
partnership's cash-flow.
Nor do we find that the risk of future litigation over
determining the rental rates or the fair market values of the
unencumbered land substantially affected decedent's potential
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