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his weighted value for JFI, Mr. Egan estimated the value of JFI
to be $439 per share ($675 per share less 35 percent). Thus,
according to Mr. Egan, the fair market value of decedent’s
interest in JFI was $85,605 (195 shares x $439 per share).
Court’s Analysis
We find Mr. Egan’s report to be very persuasive and well
supported by his underlying reasoning. We conclude, largely on
the basis of Mr. Egan’s report, that the fair market value of
decedent’s interest in JFI was $439 per share on the date of her
death. Mr. Keath’s report, the only support for the
substantially higher value determined by respondent, was
seriously flawed and unpersuasive.
It is well established that, in general, an asset-based
method of valuation applies in the case of corporations that are
essentially holding corporations, while an earnings-based method
applies for corporations that are going concerns. See Estate of
Ford v. Commissioner, T.C. Memo. 1993-580, affd. 53 F.3d 924 (8th
Cir. 1995). JFI has characteristics of both, given the
significance of real property in a farming operation, and we find
that it is appropriate to consider both asset- and earnings-based
values. As we said in Estate of Andrews v. Commissioner, 79 T.C.
at 945:
regardless of whether the corporation is seen as
primarily an operating company, as opposed to an
investment company, courts should not restrict
consideration to only one approach to valuation, such
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