- 31 -
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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