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Notice, AA Hypothetical Value, WMA Hypothetical Value, and
Current IRS Value. A footnote to the “Current IRS Value” column
in each schedule stated: “These values reflect respondent’s
agreement to allow combined minority interest and marketability
discounts of up to 40 percent.” For the most part, petitioners
prepared Exhibit 262-P and then furnished it to respondent for
his review and approval. However, respondent provided
petitioners with the “Current IRS Value” information and text for
the related footnote.
On February 16, 1999, the first day of trial, the parties
filed a stipulation of facts and a supplemental stipulation of
facts. The stipulations did not refer to “Current IRS Value[s]”
or the combined minority and marketability discounts mentioned in
Exhibit 262-P. However, the stipulations stated that respondent
was no longer asserting adjustments in the value of transferred
interests in certain companies, each of which had a “Current IRS
Value” that approximated its “Return Value/Book Value”.
Respondent’s trial memorandum, dated January 28, 1999,
stated:
In [his] notice of deficiency respondent allowed no
discounts to the underlying values of the transferred
interests. Respondent has indicated to petitioners that
minority and marketability discounts of up to 40% should
be applied in determining the fair market values of the
transferred interests.
In addition, “Current IRS Value[s]” differed from values reported
in the statutory notices because the “Current IRS Value[s]”
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