- 48 -
for the 40-percent control premium is derived from studies of
control premiums in the 1980's, and he did not establish that
such a reference was reliable for purposes of a transaction
occurring in 1951.
The estate also failed to address the issue of control in
considering what Cyril transferred in exchange for Joseph’s
shares. Cyril bound himself to transfer a remainder interest in
his shares to his children, and those shares, when combined with
the shares transferred at death by Joseph to Cyril’s children,
constituted voting control of JM. The estate’s expert agreed at
trial that he might have been inconsistent in his approach. The
estate did not consider the fact that Joseph bargained for and
received from Cyril the right to dispose of control of JM after
Cyril’s death. Joseph was ensuring that his grandchildren
received control of JM upon Cyril’s death. If a control premium
applies for purposes of valuing what Cyril received from Joseph,
then it follows, in the facts of this case, that a control
premium should also apply when valuing the interest Cyril
transferred to, or at the direction of, Joseph. The application
34(...continued)
applying the same life interest factors used in Mr. Browning’s
initial analysis, the control value received by Cyril is only
$15,185, as opposed to the $44,296 determined by Mr. Browning.
In applying the value determined by Mr. Browning for a 50-percent
interest in Joseph’s shares, $13,850, the result using only
Joseph’s percentage ownership for control value purposes is
$29,035.
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