Estate of Gladys J. Cook - Page 12

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               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.                            

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