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and Rocky Mount. Beck valued decedent’s housing partnership
interests as follows:
Total Value of Fred Jr.’s
Entity the Partnership 50% Interest
Monroe $469,307 $234,653
Clinton 158,391 79,196
Rocky Mount 187,287 93,643
Charlotte 198,005 99,003
Dvorak and Keith both qualify as experts on valuation of real
estate, and Kaye and Beck qualify as experts on the valuation of
businesses.
On August 2, 1994, respondent mailed a notice of deficiency
for Federal estate tax. The values of decedent’s 50-percent
partnership interests determined by respondent in the notice were
derived by averaging values of decedent’s interests as determined
under a net asset approach and an income approach after applying
a 10-percent discount for lack of marketability to each.3 The
values were as follows:
Partnership Income Value Asset Value Average
Monroe $577,689 $337,125 $457,407
Clinton 186,039 72,933 129,484
Rocky Mount 439,960 320,782 380,371
Charlotte 390,087 309,692 349,890
GMA 431,356 230,020 330,688
In calculating income value, respondent applied a capitalization
rate of 10 percent.
3 No lack of marketability discount was applied to the net
asset value of GMA.
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