- 53 -
Rev. Rul. 65-193, 1965-2 C.B. 370, and Rev. Rul. 68-609, 1968-2 C.B.
327, and amplified by Rev. Rul. 77-287, 1977-2 C.B. 319, Rev. Rul.
80-213, 1980-2 C.B. 101, and Rev. Rul. 83-120, 1983-2 C.B. 170. We
follow the principles set forth in Rev. Rul. 59-60, supra, which we
recognize as having been “widely accepted as setting forth the
appropriate criteria to consider in determining fair market value”,
Estate of Newhouse v. Commissioner, 94 T.C. 193, 217 (1990), to the
extent they represent a correct approach to the valuation of closely
held corporations, see Stark v. Commissioner, 86 T.C. 243, 250-251
(1986).
Mr. Bergwerk’s report characterized petitioner as an
undiversified company engaged in a single line of business, the
wholesale distribution of ice cream products, which was highly
dependent on weather and time of year. Petitioner also had “an
unhealthy concentration” of its business in H�agen-Dazs products.
Despite such drawbacks, the company had expanded its gross sales
substantially in the 5 years before the distribution of SIC stock.
Mr. Bergwerk opined that the potential for further growth was limited
because of the ability of supermarkets and ice cream manufacturers to
eliminate independent wholesale distributors from business.28
Mr. Bergwerk expressly considered each of the factors set forth
in Rev. Rul. 59-60, 1959-1 C.B. at 238-239, as a basis for valuation
of closely held corporations. In arriving at his valuation of MIC as
28 The evidence in the record strongly supports Mr.
Bergwerk’s opinion concerning petitioner’s market position and
relative vulnerability to outside forces.
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