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of Newton G. Welch, decedent's deceased husband. Pursuant to his
will, upon decedent's death, the coexecutors each received one
half of ESI's and ISC's voting common shares held in trust (i.e.,
one-half of 110 and 150 shares, respectively), and one-half of
ESI's and ISC's nonvoting common shares held in trust (i.e., one-
half of 197 and 423, respectively).1
The estate tax valuation was done on a net asset valuation
method. Employed by the estate, Mercer Capital Management, Inc.
(Mercer) valued ESI and ISC at $670,000 and $1,809,000,
respectively, as of the date of decedent's death.2 In arriving
at these values, Mercer did not include the following real
property owned by each corporation: ESI owned real property
located at 213-215 5th Avenue South and 301-307 5th Avenue South,
Nashville, Tennessee; and ISC owned real property located at 305
5th Avenue South and 302 6th Avenue South, Nashville, Tennessee.
Mercer excluded these properties from its calculations because it
believed that the properties had been targeted for potential sale
to the City of Nashville. Further, Mercer did not apply a
1 The record does not disclose the reason for the disparity
between the amount of shares issued and outstanding by each
corporation and the total identified shares (ESI having 570
shares issued and outstanding, 566 owned by decedent and held in
trust; ISC having 836 shares issued and outstanding, 832 owned by
decedent and held in trust).
2 Mercer did not consider either ESI or ISC to be in
liquidation in valuing their respective stock. Neither ESI nor
ISC was liquidated, and both corporations remain in existence and
continue to operate to date.
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Last modified: May 25, 2011