- 5 -
Average Average
1992 1991 1990 1989 1988 1988-92 1990-92
Revenues 100.0 100.0 100.0 100.0 100.0 100.0 100.0
-Direct costs 88.0 88.0 89.4 86.6 91.4 88.7 88.5
Gross profit 12.0 12.0 10.6 13.4 8.6 11.3 11.5
-Operating expenses 10.4 9.8 8.5 10.9 7.5 9.4 9.6
Operating profit 1.6 2.2 2.2 2.4 1.1 1.9 2.0
-Interest expense 0.2 0.3 0.0 0.3 0.7 0.3 0.2
+Other income(expense)0.2 0.4 0.4 0.3 0.7 0.4 0.3
Earnings before tax 1.7 2.3 2.6 2.5 1.1 2.0 2.2
OPINION
The issue for decision is the fair market value of the IHC
stock given by petitioner on October 1, 1992. Both parties rely
upon their respective experts’ opinions in attempting to
establish the correct fair market value.
Fair market value is defined as “‘the price at which the
property would change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or sell and
both having reasonable knowledge of relevant facts.’” United
States v. Cartwright, 411 U.S. 546, 551 (1973) (quoting sec.
20.2031-1(b), Estate Tax Regs.). Expert opinion sometimes aids
the Court in determining valuation; other times, it does not.
See Laureys v. Commissioner, 92 T.C. 101, 129 (1989). We
evaluate such opinions in light of the demonstrated
qualifications of the expert and all other evidence of value in
the record. See Estate of Newhouse v. Commissioner, 94 T.C. 193,
217 (1990). We are not bound, however, by the opinion of any
expert witness when that opinion contravenes our judgment. See
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