- 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%Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Next
Last modified: May 25, 2011