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2. In Mr. Kramer’s judgment, the appropriate multiple for
valuing Renier was 1.5.
We do not find Mr. Kramer’s application of the business
broker method helpful in valuing Renier. Mr. Kramer provided no
justification for the multiple he chose to apply to Renier’s
discretionary cash other than his own judgment. In the absence
of any underlying data supporting Mr. Kramer’s selection of a
multiple, we are unable to assess its appropriateness. See Rule
143(f)(1). Thus, on this record the reliability of the business
broker method has not been established.
D. Conclusion
Both experts used an asset approach to value Renier’s
nonoperating assets and concede that such an approach would be
inappropriate to value Renier’s operating assets. We agree with
their conclusions in this regard. As Mr. Sliwoski also
disregarded his market approach and as we have rejected Mr.
Kramer’s business broker method, we conclude that the income
approach provides the best method for valuing Renier’s operating
assets. Therefore, with nonoperating assets of $470,925, using
an asset approach, and operating assets of $606,019, using an
income approach, we find Renier had a fair market value on the
valuation date of $1,076,944, or $43.08 per share. Consequently,
we further conclude that decedent’s 22,100 shares in Renier on
that valuation date had a value of $952,000.
II. Addition to Tax
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