- 38 -
blocks of stock at issue, and respondent's expert Mr. Thomson
included $10,578,516 of that total tax as part of the lack-of-
marketability discount that he applied in that valuation process.
Although those dollar amounts vary because of other differences
that those experts have in the valuation process, see chart above,
each of those experts independently concluded that a 15-percent
discount or adjustment attributable to ADDI&C's built-in capital
gains tax should be included as part of the respective lack-of-
marketability discounts that they determined. We have examined
the manner in which petitioner's expert Mr. Pratt and respondent's
expert Mr. Thomson determined the respective amounts attributable
to ADDI&C's built-in capital gains tax that they believe should be
included as part of the total lack-of-marketability discount which
should be applied in valuing each of the blocks of stock at issue.
We are satisfied on the record before us that those amounts (i.e.,
$8,776,317 to $10,578,516) set the appropriate range from which we
may determine the amount attributable to ADDI&C’s built-in capital
gains tax that should be included as part of the lack-of-
marketability discount to be applied in determining the value of
each such block. Bearing in mind that valuation is necessarily an
approximation and a matter of judgment, rather than of
mathematics, Hamm v. Commissioner, 325 F.2d at 940, on which
petitioner has the burden of proof, Rule 142(a), we find on the
instant record that $9 million which is attributable to ADDI&C's
built-in capital gains tax should be included as part of the lack-
Page: Previous 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 NextLast modified: May 25, 2011