Louise B. Barnes, Donor, et al. - Page 21

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          company that has a much greater dividend payout than Home and               
          Rock Hill will also have higher stock prices.  Respondent made no           
          convincing argument in response.                                            
               A potential buyer of Home and Rock Hill stock would                    
          reasonably assume that Home and Rock Hill would continue to pay             
          low dividends.  A prospective minority shareholder of Home or               
          Rock Hill stock would almost exclusively consider dividend yield            
          rather than discounted cash-flow or income capitalization to                
          estimate the value of stock in either of these companies because            
          of the likelihood that he or she could only recoup his or her               
          investment through dividends.  Hawkins properly considered                  
          dividends to be the most significant factor because they are the            
          principal means by which a prospective shareholder could obtain a           
          return on his or her investment in Home and Rock Hill.                      
               Where there are no sales available from which to ascertain             
          the fair market value of closely held stock, courts have                    
          considered the amount of dividends which the corporation has                
          paid.  See Estate of Newhouse v. Commissioner, 94 T.C. 193, 217             
          (1990); Estate of Leyman v. Commissioner, 40 T.C. 100, 119                  
          (1963), remanded on other grounds 344 F.2d 763 (6th Cir. 1965);             
          Estate of Tebb v. Commissioner, 27 T.C. 671, 675 (1957); Estate             
          of Oman v. Commissioner, T.C. Memo. 1987-71 (Government expert              
          used valuation based in part on capitalization of dividends).               








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