Estate of James J. Renier, Deceased, Kent L. Renier and Dubuque Bank & Trust Company, Co-Executors - Page 12

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          reported net income in order to “normalize” it; that is, to                 
          convert Renier’s historical average net income into income that a           
          hypothetical purchaser could expect in the future, by eliminating           
          anomalous transactions and capital structures.  However, the                
          experts exhibited significant differences regarding the necessary           
          “normalizing” adjustments.  They also had significant differences           
          in computing the capitalization rate that should be applied to              
          normalized income and, to a lesser extent, differences in the               
          methodology for valuing Renier’s nonoperating assets.  The                  
          foregoing differences produced dramatically different results.              
          Mr. Sliwoski valued Renier’s operating assets at $1,293,760, to             
          which he added his estimate of the value of Renier’s nonoperating           
          assets of $553,938,5 for a total value of $1,847,698 on the                 
          valuation date.  Mr. Kramer’s income approach, by contrast,                 
          resulted in a value for Renier’s operating assets of $450,104;              
          i.e., an amount approximately two-thirds lower than Mr.                     
          Sliwoski’s computation.  The difference in Mr. Kramer’s estimate            
          for Renier’s nonoperating assets was not as dramatic; Mr.                   
          Kramer’s estimate was $470,9256 versus Mr. Sliwoski’s $553,938.             

               5 Although Mr. Sliwoski recognized he had double counted a             
          liability of $137,038, he did not modify his computations to                
          correct for this error.  Had he done so, Renier’s nonoperating              
          assets would have increased by $137,038, and its total value                
          would have equaled $1,984,736.  In any event, respondent has not            
          sought an increase in his deficiency determination in connection            
          with this error.                                                            
               6 Unlike Mr. Sliwoski’s value for nonoperating assets, this            

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