- 88 -
Reasonable people can differ. Many of the experts agreed that
“residual value forecasting is more an art than a science” (and
that forecasting computer residual values was similar to predicting
the stock market).
We are not bound by the opinion of any expert witness when
that opinion is contrary to our own judgment. Chiu v.
Commissioner, 84 T.C. 722, 734 (1985). We may accept or reject
expert testimony as we, in our best judgment, deem appropriate.
Helvering v. Natl. Grocery Co., 304 U.S. 282 (1938); Silverman v.
Commissioner, 538 F.2d 927, 933 (2d Cir. 1976), affg. T.C. Memo.
1974-285. On the basis of our analysis of the transaction, and the
methods of evaluation employed by each expert, we find that
petitioners’ experts overvalued the residual value of the equipment
and that respondent’s experts undervalued it.
Petitioners’ experts posit that several unforeseen factors
resulted in RD Leasing’s failure to realize the projected residual
values of the computers: (1) The introduction and commercial
success of a new technology by IBM, called CMOS21 (complementary
metal oxide semiconductor), and IBM’s failure to provide a “path”
by which existing mainframes could be upgraded; (2) IBM’s
21 CMOS processors had the following advantages: they
cost less than 25 percent of the list price of IBM’s older
mainframes; they required substantially less floor space; they
did not require dedicated environmental support (i.e., they were
air cooled instead of water cooled); they could be maintained for
50 percent less than older machines; and they could be configured
to process data in less time.
Page: Previous 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 NextLast modified: May 25, 2011