- 25 -
determined should be applied, $10,578,516 is attributable to that
tax.12
It is respondent's position that no discount or adjustment
attributable to ADDI&C's built-in capital gains tax should be
applied in determining the fair market value on the valuation date
of each of the two blocks of stock in question. Respondent thus
not only rejects the views of petitioner and petitioner's two
experts, but also the opinion of respondent's expert Mr. Thomson,
that such a discount or adjustment is warranted. In support of
respondent's rejection of Mr. Thomson's opinion, respondent
asserts on brief:
Respondent recognizes that her own expert included the
potential capital gains in his determination of an
appropriate marketability discount; nevertheless, this
inclusion is contrary to Federal tax law.
In support of respondent's position that a discount or
adjustment attributable to ADDI&C's built-in capital gains tax is
"contrary to Federal tax law", respondent advances the following
argument in respondent's opening brief:
12 There are differences between the respective dollar amounts
of the 15-percent discount or adjustment attributable to ADDI&C's
built-in capital gains tax, which both petitioner's expert Mr.
Pratt and respondent's expert Mr. Thomson included as part of the
respective lack-of-marketability discounts that they concluded
should be applied to ADDI&C's net asset value on the valuation
date after that net asset value has been reduced by a minority
discount. That is because of the differences between those two
experts (1) as to whether a blockage and/or SEC rule 144 discount
is warranted and (2) as to the amount of the minority discount
that each believed should be applied. See chart above showing,
inter alia, those differences.
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