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of the units fairly represented the value of the underlying
assets of the Partnership and that any potential control premium
that may have been associated with the units was incorporated in
the market price of the units. Mr. Matthews generally supported
Professor Bradley.
Respondent, on the other hand, argues that the trading value
of the partnership units is irrelevant in determining the value
of the assets in petitioner’s hands. Respondent contends that
the Efficient Market Hypothesis relates to the valuation of an
entity’s securities, not the underlying assets, and that in the
timber industry, the value of an entity’s assets will greatly
exceed its trading value because of the long time period it takes
to generate cash-flows.
We disagree with respondent that the trading value of the
units is irrelevant to a determination of the value of the
underlying assets. However, we do not accept petitioner’s
contention that the aggregate value of the partnership units at
the $11.50 trading price should be used to mathematically
determine the value of the partnership's assets.17
16(...continued)
for buyers to wait until after the exdividend date.
17Petitioner argues that two prior Tax Court opinions stand
for the proposition that when valuing the assets of a publicly
traded company, there is no difference between the freely traded
minority stock value and the value of the underlying assets.
Philip Morris, Inc. and Consol. Subs. v. Commissioner, 96 T.C.
606 (1991), affd. without published opinion 970 F.2d 897 (2d Cir.
(continued...)
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