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Nor are petitioners assisted by citing Estate of Davis v.
Commissioner, 110 T.C. 530 (1998). There, we rejected the
Commissioner’s attempt to narrow the field of hypothetical
willing buyers. The Commissioner had done so by advancing the
unwarranted assumption that a hypothetical buyer would cause the
acquired corporation to escape its potential tax liabilities by
having it elect S corporation status and by not permitting it to
sell any of its assets for 10 years thereafter. Unlike the
assumption there, the assumption here that the cost-shifting
attribute is a valuable asset is fully warranted. In fact, as
explained below, both experts have ascribed value to the Sta-Home
tax-exempt entities’ cost-shifting mechanism. In addition,
petitioners’ expert, Alfred D. Hahn (Hahn), has elsewhere written
that “transaction prices reflect the value to a buyer to shift
overhead costs”. Hahn et al., “Home Health Agency Valuation:
Opportunity Amid Chaos”, Intrinsic Value (Spring 1998).
B. Role of the Expert
As typically occurs in a case of valuation, each party
relies primarily upon an expert’s testimony and report to support
the respective positions on valuation. A trial judge bears a
special gatekeeping obligation to ensure that any and all expert
testimony is relevant and reliable. Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 147 (1999); Daubert v. Merrill Dow
Pharm., Inc., 509 U.S. 579, 589 (1993).
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