- 30 - rate applied to the promissory notes, resulting in a liability of $73,609 as of the valuation date. Mr. Mitchell subtracted the discounted value of the notes payable, the property taxes and interest, and the $499 accounts payable from the fair market value of Clubside’s assets, and arrived at a net asset value of $2,319,634. Mr. Mitchell felt that a 35-percent lack of marketability discount and an 18-percent minority interest discount were appropriate for Clubside.26 Mr. Mitchell determined that the aggregate value of Clubside was $1,229,406 and that the fair market value of decedent’s 27.5-percent interest was $338,000.27 Mr. Bishop determined the value of decedent’s partnership interest in a different manner. He projected the sale of the Cathead property over a period of 3 years. Then, Mr. Bishop subtracted the amount of interest that would accrue on the promissory notes and the amount of property taxes due on the Cathead property after 3 years. Mr. Bishop assumed that the value of the Cathead property would remain constant at 26The estate does not object to the percentage figures used by Mr. Mitchell in applying the lack of marketability and minority interest discounts. Mr. Mitchell combined the two discounts, resulting in a combined discount rate of 46.7 percent, which he rounded up to 47 percent. 27We note that respondent’s valuation is more than 25 percent less than the value determined as of Dec. 31, 1993, in the financial statement prepared for Mr. Hoffman by his accountant.Page: Previous 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Next
Last modified: May 25, 2011