Charles C. Dockery, Donor - Page 20

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          year period before the date of each gift), and the formulas                 
          described in Estate of Feldmar v. Commissioner, T.C. Memo. 1988-            
          429.  He multiplied Crossroads' pretax weighted average income by           
          a price/earnings capitalization rate of five to estimate the                
          value for the stock.  Wise calculated Crossroads' average claim             
          paid to show whether it had enough reserves to pay its historical           
          claims.  He projected that the price/earnings value of                      
          Crossroads' stock (using weighted average earnings) was $978 per            
          share as of January 1, 1992, and $1,537 per share as of January             
          1, 1993.  He weighted the price/earnings method 60 percent and              
          the book value method 40 percent to estimate the value of                   
          Crossroads' stock on the gift dates.  He estimated that                     
          Crossroads' stock was worth $1,083 per share as of January 1,               
          1992, and $1,554 per share as of January 1, 1993.  He then                  
          applied a 35-percent discount and estimated that the stock was              
          worth $704 per share as of January 1, 1992, and $1,010 per share            
          as of January 1, 1993.                                                      
          C.   Analysis                                                               
               We accept KPMG Peat Marwick's reserve estimate and appraisal           
          of Crossroads' common stock instead of those of Gallagher or                
          Wise.                                                                       
               1.   KPMG Peat Marwick                                                 
               Respondent points out that Crossroads did not discount its             
          1991 and 1992 reserves for the time value of money, and contends            






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