- 18 -
The income method assumed the continuation of Deft's present
policies and did not account for a change in control. This
method therefore produced an unadjusted value based on a minority
interest. Id. at 195. Thus, it would be proper to apply a
control premium to the unadjusted value under this method. Id.
The market method is based on comparisons with publicly
traded stocks. This method produces an unadjusted value which
represents the value of a minority interest, and it generally
would be proper to apply a control premium to the unadjusted
value under this method. Id. at 162.
HML determined that a 25-percent control premium was
appropriate under the market method. We find HML's determination
reasonable, and we conclude that a control premium of 25 percent
is appropriate. We shall apply this premium to the unadjusted
value we determined under the income method.6
4. Conclusion
Utilizing the income method and the market method, we find
the fair market value of decedent's interest in Deft on the
alternate valuation date was:
6 HML already included the control premium in its
unadjusted value determined under the market method; therefore,
we shall not apply a separate control premium to the unadjusted
value under that method.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011