- 11 - In determining the fair market value of decedent’s 219,710 shares of Brookshire common stock (representing 9.79 percent of all outstanding shares of Brookshire common stock), petitioner's two experts and respondent's expert agree that a discount is appropriate to reflect the lack of marketability of the stock. They disagree, however, as to the amount thereof. Because petitioner and respondent’s notice of deficiency utilize the same $58.75 per-share value for the 112,884 shares of Brookshire common stock that are not subject to the stock- purchase agreement, we need only address the valuation of the 106,826 shares of Brookshire common stock that are subject to the stock-purchase agreement. Petitioner's first expert values the 106,826 shares of Brookshire common stock subject to the stock-purchase agreement at $6,302,734 or $59.00 per share. Petitioner's first expert utilized: (1) The guideline company method, comparing Brookshire's revenue, net income, earnings, cash-flow, and book value with those of similarly sized, publicly traded corporations operating grocery stores; (2) the discounted cash-flow method, calculating the net present value and future earnings of Brookshire and the return on investment using a 9-percent rate of return; and (3) the capitalization of dividends method, using a 2-percent yield rate. Petitioner’s first expert also applied aPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011