Estate of William J. Desmond, Deceased, Donn Kemble, Executor - Page 15




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               We conclude that the unadjusted value under the income                 
          method did not include Deft's potential environmental                       
          liabilities, and HML's consideration of Deft's potential                    
          environmental liabilities within the lack of marketability                  
          discount was proper.  Thus, we shall apply a discount to the                
          unadjusted value under the income method for the potential                  
          environmental liabilities.                                                  
               Under the market method, HML utilized the average price to             
          earnings multiple for two similar paint and finishing companies             
          in determining the unadjusted value.  Respondent contends that              
          these multiples already include the potential environmental                 
          problems faced by the similar companies; therefore, it is                   
          improper to also consider these liabilities in determining the              
          proper discount.                                                            
               Respondent's expert testified that paint and finishing                 
          companies trade at lower multiples as a result of the potential             
          environmental liabilities associated with the industry.                     
          Petitioner did not provide any other explanation for the lower              
          multiples.  We conclude that the multiples used by HML took into            
          account the potential environmental liabilities of the comparable           
          companies; therefore, we shall not apply a discount to the                  
          unadjusted value under the market method for the potential                  
          environmental liabilities.                                                  
                         c.  Computing the Discount                                   
               We must determine an appropriate lack of marketability                 
          discount for decedent's interest.  We base our finding on a                 

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