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the correct value is more in line with respondent’s
determination.
Although we do not find them to be correct in their
entirety,38 respondent’s analysis and expert were more reliable
and reflected a better approximation of the values of the
interests at issue. Mr. Stewart accurately applied the
hypothetical willing buyer and willing seller test and was
consistent in valuing the stock interests transferred and
received by Cyril on a minority basis. Additionally, the
marketability and minority discounts were applied separately, and
no minority discount was applied under the market approach.
Respondent’s valuation of the underlying shares is also
supported by the estate and gift tax returns filed by Joseph and
Cyril and the document setting forth the agreed-upon adjustments
relating to Joseph’s estate tax return. In Joseph’s 1950 gift
tax return, he valued JM common stock between $1.98 and $2.25 per
share. Joseph’s 1953 estate tax return, as adjusted by the IRS
estate tax examiner and accepted by the estate, assigned a value
of $2.25 per share to JM common stock and $1 per share to JM
preferred stock. The 1953 estate tax return assigned values of
$1 per share for the JM stock subject to an option held by Cyril,
$150 per share for Specialty common stock, and $.90 per share for
38Respondent based his valuation determination in part on a
market approach. The companies used by respondent were all
substantially larger in terms of total assets and revenues, sold
a wider variety of merchandise and services to a broader customer
base, and, other than a Macy’s located in San Francisco, none of
the companies had stores located in San Francisco or Reno.
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