Estate of Charles a. Boratello, Deceased, C. Norman Borgatello and Josephine E. Donnelly, Co-Executors, and C. Norman Borgatello, Successor Trustee to the Charles A. Borgatello Living Trust - Page 31




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            inherent in VIC's assets would be 20.5 percent, not 18.5 percent                           
            rounded to 19 percent.                                                                     
                  Mr. Brockardt does not engage in the kind of explicit                                
            analysis in which Mr. Wilde engages, but Mr. Brockardt does                                
            calculate, on the basis of Mr. Holden's valuations of MVN and                              
            MVS, the impact of an immediate tax on the net asset value of                              
            VIC.  According to Mr. Brockardt, an immediate tax on the built-                           
            in gains would warrant a 31.2-percent discount in the net asset                            
            value of VIC.  On the basis of our valuations of MVN and MVS, an                           
            immediate tax on the built-in gain would warrant a 32.3-percent                            
            discount in the net asset value of VIC.9  Applying that amount                             
            as a discount to the net asset value is unrealistic because it                             
            does not account for any holding period for the assets.  The                               
            estate's expert concedes that there would be some period of tax                            
            deferral although he did not articulate how long the period of                             
            deferral would be.  Mr. Wilde assumes a 10-year holding period                             



            9     We arrived at this amount as follows:                                                
            Net asset value                                                   $15,924,290              
            Total assets at market value                    $18,467,290                                
            Less book value                                 (5,649,963)                                
            Unrealized capital gain                         $12,817,327                                
            Net California gain           $12,817,327                                                  
            Less: California tax at 9.3%  (1,192,011)                                                  
            Net Federal gain              $11,625,316                                                  
            Less: Federal tax at 34%       (3,952,607)                                                 
            Total Tax on capital gain                       $5,144,618                                 
            TOTAL CAPITAL GAIN AS A PERCENTAGE OF NET ASSET VALUE:            32.3%                    





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