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is no evidence that these notes were subordinate to the notes
payable to decedent and Hoffman Associates. The main asset of
Clubside was the Cathead property, and Clubside’s available cash
was negligible as of the valuation date. However, as of the
valuation date, Clubside’s asset-to-liability ratio was
approximately 3 to 1, and Clubside had the option to prepay the
notes in full or in part, without penalty, at any time. There is
no evidence in the record to indicate that the promissory notes
would not be honored by Clubside as of the date of maturity. We
believe that a willing buyer would consider all these factors in
determining an appropriate rate of return on an investment of
this nature. After reviewing the reports and testimony of both
parties’ experts, we agree with respondent that a 12.5-percent
rate is appropriate and hold that the values of the promissory
notes payable to decedent and Hoffman Associates were $56,664 and
$91,070, respectively, as of the valuation date.
2. Value of 27.5-Percent Interest in Clubside Partnership
At the time of her death, decedent held a 27.5-percent
interest in Clubside. Respondent determined that decedent’s
interest was worth $338,000 as of the valuation date. The
estate determined that decedent’s interest was worth $290,582 as
of the valuation date.20
20At trial, Mr. Bishop admitted that he erred in his
analysis because he did not properly account for the value of the
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