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after-tax income figure using a capitalization rate derived from
comparisons with large, publicly traded real estate management
companies. He found the value of GMA as a whole to be
$450,000.15 Beck, on the other hand, believed that the value of
GMA was intrinsically tied to the value of the four housing
partnerships. Further, he argued that because GMA had no fixed
assets and its only assets were accounts receivable from the
housing partnerships, its value was simply equal to the net
realizable accounts receivable as of December 1989 (the time
closest to the valuation date for which figures were available).
We agree with Beck’s assertion that the value of GMA was
tied to the value of the housing partnerships, but we disagree
with his conclusions as to the value of GMA. He failed to
recognize that the hypothetical buyer investing in GMA would not
merely be buying the accounts receivable on a particular date,
but instead would be buying the income stream attributable to 10
percent of the rental income of each of the four housing
partnerships, minus expenses associated with managing the housing
partnerships. Thus, we reject Beck’s approach altogether.
Petitioner makes no specific challenges to the income
approach used by Kaye. Rather, petitioner makes two arguments:
15 We note that in the notice of deficiency respondent
determined the value of decedent’s 50-percent interest in GMA to
be $330,688. By proffering Kaye’s report, respondent has
apparently abandoned the position that decedent’s interest in GMA
has a value any greater than $225,000 (50 percent of $450,000).
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