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trend during this period is discernible, because for some time
prior to its fiscal year ended June 30, 1993, Renier
overestimated its cost of goods sold as the result of an error in
its inventory accounting system and, consequently, underreported
its net income. This error was addressed in 1996, at which time
Renier filed amended corporate income tax returns for 1993 and
1994, reporting increased taxable income for those years. These
changes resulted in Renier’s having additional income tax
liabilities totaling $137,038 for the period beginning July 1,
1992, and ending on the valuation date,2 which Renier paid in
1996. Renier also revised its financial statements to reflect
the changes. After the revisions, Renier had total pretax net
income from July 1, 1988 through the valuation date of $879,597,
and after-tax net income of $579,367.
Decedent became president of Renier in the 1960's and served
in that position until his death. At his death, decedent owned
22,100 of the 25,000 outstanding shares of Renier’s common stock.
Renier’s shares have never been listed on any stock exchange or
available on any over-the-counter market and have never been
publicly traded or privately traded.
The co-executors hired Jules Steinberg to appraise Renier’s
shares for estate tax purposes. Based on Mr. Steinberg’s
2 Renier had increased tax liability for its 1993 fiscal
year of $108,495 and increased tax liability of $28,543, on a
prorated basis, for the first 9.33 months of Renier’s 1994 fiscal
year that occurred prior to the valuation date.
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