- 275 -
discounts to the marketable minority values as of January 1,
1993, June 4, 1994, and June 30, 1994.
b. Final Lax Report
As previously described, see supra p. 271, Mr. Lax applied a
combined minority and marketability discount from net asset value
of 60 percent. Thus, Mr. Lax’s nonmarketable minority value as
of June 3, 1994, was $6,869,694.77
c. Respondent’s Position
Respondent argues that the size adjustment applied by Mr.
Hall to value True Ranches’ land and improvements reflected the
difficulties associated with marketing such a large ranch.
Respondent contends that the marketability discounts applied my
Messrs. Kimball and Lax incorporated similar considerations.
Therefore, respondent concludes that the marketability discounts
in the Kimball and Lax reports are redundant and allows no
marketability discounts in valuing the subject interests in True
Ranches.
d. Court’s Analysis
We reject Mr. Kimball’s justifications for marketability
discounts that derive from the buy-sell agreement restrictions.
We also reject respondent’s argument that any marketability
discount used to determine the fair market value of an interest
77Due to a computational error, the final Lax report
incorrectly computed the nonmarketable minority value to be
$7,084,370.
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