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cause a client to leave petitioner for another accountant.
The factors used by Dr. Alexander are: Death, relocation,
retirement, and client turnover. Dr. Alexander concluded
that the average death rate was 5.3 percent, the average
relocation or migration rate was 5.4 percent, the average
retirement rate was 7.5 percent, and the average turnover
rate was 5.0 percent. He concluded that the sum of these
percentages, 23.2 percent, would be the rate at which
petitioner could expect to lose clients from the list,
resulting in a useful life of 4 to 5 years. We review
Dr. Alexander's computation of each of these factors below.
Death Rate: Dr. Alexander grouped 164 of the 206
listed clients into groups in accordance with their life
expectancy. He determined the life expectancy of the
clients using the actuarial tables in IRS Publication 575.
He used only actuarial rates for males. He grouped the
clients into 5-year "cohorts"; i.e., clients with a life
expectancy of 0 to 5 years, 5 to 10 years, 10 to 15 years,
15 to 20 years, etc.
Dr. Alexander divided the number of individuals in
each cohort by the life expectancy of that cohort to arrive
at an expected annual number of deaths for that cohort.
He then added the annual deaths for each cohort to arrive
at an expected annual number of deaths among the listed
clients of 8.512 deaths per year. Based thereon,
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