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Commissioner, 813 F.2d 837, 842 (7th Cir. 1987), affg. Lio v.
Commissioner, 85 T.C. 56 (1985); Silverman v. Commissioner, supra
at 933; IT & S of Iowa, Inc. v. Commissioner, supra at 508; Chiu
v. Commissioner, 84 T.C. 722, 734 (1985).
Here, the experts began by observing that the methodology
traditionally used in business appraisals includes an income
approach, a cost approach, and a market approach. In an income
approach, value depends upon the present value of future economic
benefits to be derived from ownership. An enterprise’s price-
per-share value is then estimated by discounting the net
cashflows available for distribution back to their present value,
at market-based rates of return. The cost approach uses
estimates of current costs to replace the enterprise’s fixed
assets and certain intangible assets. The market approach
establishes the value of a privately held corporation through
analyses of sales or transfers of guideline companies. The
information derived from this analysis is then used to form an
opinion of market value for a subject company.
C. Expert Testimony for Petitioners
To support their contention that the value of the Sta-Home
tax-exempt entities’ assets was less than the liabilities
assumed, petitioners rely upon the report and testimony of Hahn.
Hahn, a director in PricewatershouseCoopers Northeast Region
Corporation Valuation Consulting Group, has written extensively
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