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petitioners would have zero capital expenditures for landfills
and buildings during the 10 years that she considered. We
believe that assumption is unrealistic because waste companies
must incur a substantial amount of capital expenditures to
develop landfills and acquire other assets in the normal course
of operations. Poppei's market value approach erroneously
assumed LII's invested capital would increase by 17.9 percent in
the year ending August 31, 1988, while the invested capital of
WMI decreased 2 percent and BFI decreased 4 percent.
Fuller's calculations were also incorrect because he should
have applied, but did not apply, a minority discount for LII's
minority interest (which Poppei properly did). He did not
compute financial ratios for LII, and his ratios for LTI did not
include adjustments for the LII minority interest.
e. Conclusion
We conclude that petitioners were thinly capitalized. This
factor supports treating the LIIBV advances to petitioners as
equity.
9. Identity of Interest Between Creditor and Shareholder
If advances by shareholders are proportionate to their stock
ownership, the advances are more likely to be equity. Estate of
Mixon v. United States, supra at 409; Tomlinson v. 1661 Corp.,
377 F.2d 291 (5th Cir. 1967); Leach Corp. v. Commissioner; 30
T.C. 563, 579 (1958).
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