Charles C. Dockery, Donor - Page 24

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          used in Estate of Feldmar to convert Crossroads' weighted average           
          earnings in that the Court in Estate of Feldmar applied the                 
          capitalization rate to posttax earnings and Wise applied it to              
          pretax earnings.  The corporation in Estate of Feldmar sold life            
          insurance, individual and family accident and health insurance,             
          vehicle warranty/service contracts, and collateral protection               
          services; Crossroads sells only workers' compensation                       
          reinsurance.  Unlike life insurance, workers' compensation                  
          reinsurance is long-tail insurance because of the length of time            
          before a reinsurer's obligations mature.  See S. Rept. 99-313, at           
          502 (1986), 1986-3 C.B. (Vol. 3) 502.  This makes the size of the           
          reinsurer's reserve much more important because the reinsurer's             
          liability can extend for longer periods.  Id.                               
          D.   Discount                                                               
               Petitioner argues that we should apply a 35-percent discount           
          for minority interest and lack of marketability to Gallagher's              
          estimate of the value of Crossroads' stock (zero for January 1,             
          1992 and $331 per share for January 1, 1993), and thus contends             
          that the stock was worth zero on January 1, 1992, and $215 per              
          share on January 1, 1993.                                                   
               Respondent agrees that petitioner is entitled to lack of               
          marketability and minority interest discounts.  Respondent                  
          applied a 35-percent discount to the fair market value of                   








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