- 12 -
Here, the 19 annual payments were backed by investments in
U.S. Government bonds, virtually eliminating the risk of default.
As for the assumptions regarding mortality, both parties agree
that the payments were set to end on a date certain. Therefore,
use of the tables in this case could hardly create an
unreasonable or unrealistic result.
In this case, three experts used varying valuation methods
based on a willing-buyer willing-seller approach. All of them
employed a discount for the inherent lack of marketability of the
lottery payments, none of them used the valuation tables
prescribed by the regulations,5 and none of the valuations were
alike. The estate suggests that the mere fact that there were
differences among the amounts of the valuations warrants a
departure from the tables.6 However, the three valuations with
various methodologies in this case make a compelling argument
justifying the use of valuation tables. In the words of the
Court of Appeals for the Ninth Circuit: “actuarial tables
provide a needed degree of certainty and administrative
convenience in ascertaining property values and prove accurate
5 Respondent offered this expert valuation only in the
alternative--in the event the Court were to reject respondent’s
primary argument that the valuation tables control. See supra
note 3.
6 If the valuation tables are used, the net value of the
lottery payments was $8,557,850. The estate’s two experts valued
the lottery payments at $4,575,000 and $6,053,189, and
respondent’s expert found a value of $5,762,791.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011