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would be applied to reflect the constraints imposed on minority
owners. Moreover, True Oil is primarily in the business of
selling its assets; thus, liquidation is not the only means by
which an owner would have access to the company’s net asset
value. Here it is likely that a hypothetical purchaser would
give substantial weight to True Oil’s underlying asset values
even though he would not have the ability immediately to realize
those values in their entirety by forcing liquidation. See
Estate of Andrews v. Commissioner, 79 T.C. at 945; Estate of Dunn
v. Commissioner, T.C. Memo. 2000-12.
Turning to the guideline company method, the Kimball reports
present a clear and adequately documented approach to determining
True Oil’s marketable minority value. However, we note a few
areas of concern. First, we could not trace any adjustments made
to either the guideline companies’ earnings multiples or True
Oil’s financial fundamentals to reflect the fact that intangible
drilling and dry hole costs were being accounted for differently.
This omission could lead to significant distortions in value
given True Oil’s substantial intangible drilling (including
nonproductive well) costs over the years. Second, Mr. Kimball’s
consistent choice of only the lowest guideline company multiples
suggests a lack of comparability between the selected companies
and True Oil. Third, the restrictive provisions (other than
price) of True Oil’s buy-sell agreement inappropriately
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