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discount). Based on the factors in toto, HML concluded the lack
of marketability discount should be 25 percent.
HML deducted the 25-percent marketability discount from the
weighted average unadjusted value and concluded that the fair
market value of a 100-percent interest in Deft on the alternate
valuation date was $7,647,000. HML then divided the fair market
value of a 100-percent interest by the number of outstanding
shares (166,000) and found that Deft's fair market value per
share was $46.07. HML multiplied Deft's fair market value per
share by the number of shares held by decedent at his death
(136,000) and concluded the fair market value of the decedent's
interest in Deft on the alternate valuation date was $6,266,000.
2. Respondent's Expert
Respondent relies on a report compiled by Business Valuation
Services, Inc. (BVS). BVS's analysis was limited to determining
an appropriate lack of marketability discount for the decedent's
interest in Deft. BVS did not determine the unadjusted value of
Deft.
Respondent instructed BVS to assume that the unadjusted
value, including consideration of the potential environmental
liabilities, was $10,200,000. BVS determined that an appropriate
lack of marketability discount for decedent's interest should be
between 0 percent and 5 percent. As instructed by respondent,
BVS did not consider Deft's potential environmental liabilities
in determining the appropriate discount.
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Last modified: May 25, 2011