Estate of Etta H. Weinberg - Page 25

                                       - 25 -                                         

             of the corporation’s underlying net assets.  See id. at                  
             943.  For that reason, the Commissioner argued that the                  
             corporations should not be valued using earnings and                     
             dividend-paying capacity.  See id.  In resolving that                    
             dispute, we stated as follows:                                           

                  [R]egardless of whether the corporation is seen                     
                  as primarily an operating company, as opposed to                    
                  an investment company, courts should not restrict                   
                  consideration to only one approach to valuation,                    
                  such as capitalization of earnings or net asset                     
                  values.  * * * Certainly the degree to which the                    
                  corporation is actively engaged in producing                        
                  income rather than merely holding property for                      
                  investment should influence the weight to be                        
                  given to the values arrived at under the                            
                  different approaches but it should not dictate                      
                  the use of one approach to the exclusion of all                     
                  others. [Id. at 945; citations omitted.]                            

                  In this case we do not agree with respondent that the               
             net asset value approach is irrelevant on the ground that a              
             hypothetical buyer of the subject limited partnership                    
             interest would have no control over when the underlying                  
             property was sold or when the partnership was liquidated.                
             The net asset value should still be considered because the               
             value of the underlying real estate will retain most of its              
             inherent value even if the corporation is not efficient in               
             securing a stream of rental income.  See id. at 944.  Thus,              

Page:  Previous  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  Next

Last modified: May 25, 2011