- 41 -
not believe the record supports his conclusion that the 12,000
shares owned by decedent at the time of her death would be a
“swing block”.27 Accordingly, we reject the 10-percent lack of
marketability discount used by Mr. Haywood and find instead that
the lack of marketability discount of 35 percent estimated by Mr.
Egan is appropriately employed here. Accepting Mr. Haywood’s
weighting of 60 percent for the earnings-based value of $195 and
40 percent for the asset-based value of $82, the value before a
lack of marketability discount would be $150. Applying a lack of
marketability discount of 35 percent produces a final value of
$97 per share.
Conclusion: The Value of Decedent’s Shares in FNBW
When each of the experts’ computations of the value of the
FNBW stock is adjusted to eliminate the errors that we perceive
in their analyses, the results do not diverge greatly. As
adjusted, the valuations of Messrs. Hitt, Egan, and Haywood are
$103, $93, and $97 per share, respectively, a range of less than
11 percent. In these circumstances, we conclude that the most
reliable estimate of value is an average of the three, or $98 per
27 Mr. Haywood testified that the block of 12,000 shares
might be a swing block if it was purchased by family members who
already owned a sufficiently large portion of the shares of FNBW.
This view fails to consider the hypothetical buyer of the shares.
See Estate of Hendrickson v. Commissioner, T.C. Memo. 1999-278
(citing Estate of Curry v. United States, 706 F.2d 1424, 1428-
1429, 1431 (7th Cir. 1983)).
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