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basis, respondent’s expert concluded that a share of IHC stock is
worth $606.65.
Court’s Analysis
Not unexpectedly, each of the parties criticizes the opinion
of the other’s expert. We have considered each of the criticisms
in our analysis.
Petitioner has presented an asset-based value, but with
certain flaws in its methodology. Respondent’s expert has not
presented us with a value based on the asset approach, reasoning
that because IHC is not a holding or investment company, the
approach is not as appropriate as one based on income or market
comparables. Also, respondent’s expert opined that the asset
approach is not as reliable for going concerns because of the
difficulty of valuing intangibles.
The company’s net worth is one of the factors to be
considered, see sec. 25.2512-2(f), Gift Tax Regs., and the asset-
based approach provides a value useful for comparison with the
results of other approaches. Petitioner’s expert began with
IHC’s September 30, 1992, balance sheet. However, there is
little support for his $140,666 downward adjustment for the
purportedly uncollectible receivable. Also, the adjustment for
fair market value of the depreciable assets is based on the
representation of IHC’s management and quick sale values, rather
than on independent appraisals of value in an orderly disposition
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