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the FOH shares in the Harriett trust were reported at a value of
$11,786,178 or $4.79 per share, and the FOH shares in the QTIP
trust, includable in decedent's estate pursuant to section 2044,
were reported at a value of $11,786,178 or $4.79 per share. In
valuing the shares of FOH, the coexecutors consulted legal
counsel and obtained two appraisals. The appraisers that were
employed by the coexecutors were the investment firm of Janney
Montgomery Scott, Inc. (JMS), and the appraisal firm of
Willamette Management Associates (WMA). Each appraisal valued
the shares as separate 27.8671-percent interests in FOH. The
appraisals concluded that, because of the size of the blocks
under consideration in relation to the trading volume, petitioner
would not be able to sell the holdings in the public market
without incurring a blockage discount. The WMA appraisal valued
the shares at $4.85 per share, after applying a 30-percent
discount, and the JMS appraisal valued the shares at $4.79, after
applying a 31-percent discount. Based on the appraisals, the
estate valued the shares on its United States Estate Tax Return
at $4.79 per share.
In October 1993, FOH filed an Amendment to its Certificate
of Incorporation (amendment) resulting in a redesignation of the
existing capital stock as class A capital stock and the creation
of a new class of nonvoting capital stock designated as class B
capital stock. In connection with the amendment, the existing
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