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and therefore assigned a zero percent. As for the holding
period, Mr. Wahlgren opined that neither the Company nor the Bank
would be sold within 10 years because Mr. Janda wanted to
continue to operate the Bank for as long as possible and, in any
event, Robert Janda wanted to manage the bank thereafter. With
regard to the holding period return of 21.47 percent, Mr.
Wahlgren considered the risk-free yield on U.S. Treasury bonds,
the difference between long-term yields on common stock over
intermediate U.S. Government bonds, and a small stock premium.
Respondent challenges Mr. Wahlgren’s use of the QMDM model
on the basis that there is no evidence that appraisal
professionals generally view the QMDM model as an acceptable
method for computing marketability discounts. Respondent also
asserts that the data used by Mr. Wahlgren in the QMDM model is
inaccurate.
We recognized in Estate of Weinberg v. Commissioner, T.C.
Memo. 2000-51, that “slight variations in the assumptions used in
the [QMDM] model produce dramatic difference in results.” The
effectiveness of this model therefore depends on the reliability
of the data input into the model.
We have serious reservations with regard to the assumptions
made by Mr. Wahlgren. For example, we are concerned whether in
determining the growth rate of the Company, it was proper for Mr.
Wahlgren to simply average the Bank’s historical returns on
equity for the 5 years prior to December 31, 1992, and then
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