Michael T. Caracci and Cindy W. Caracci, et al. - Page 47




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          of the capital infusion.)  Finally, we also believe that current            
          liabilities should be increased by $201,000, as suggested by                
          Hahn, to reflect a reserve for disallowed claims on its Medicare            
          cost reports.  This increases the current liabilities to                    
          $11,475,000, before deducting the amount of withheld payroll that           
          is to be considered part of the MVIC.                                       
               When we take these modifications into account, we arrive at            
          a fair market value of $18,675,000:                                         
               Indicated MVIC                     $11,300,000                         
               Plus current liabilities            11,475,000                         
               Less withheld payroll               (4,100,000)                        
               Indicated asset value               18,675,000                         
               We are unimpressed and unpersuaded by Hahn’s conclusions as            
          to the fair market value of the Sta-Home tax-exempt entities, and           
          we have decided not to accept them.  His reasoning that the Sta-            
          Home tax-exempt entities had a fair market value of less than               
          zero is unconvincing, and, in fact, appears to be more an                   
          advocacy of petitioners’ litigating position than a candid fair             
          market appraisal.  We think a willing buyer would be puzzled and            
          confused by his conclusions.  Neither Hahn’s “adjusted balance              
          sheet” approach nor his backup market approach justify the                  
          finding of a negative net worth.                                            
               First, in one substantial respect, even Hahn’s “best case”             
          adjusted balance sheet is seriously deficient.  Hahn’s report               
          states:  “Most buyers concentrate on the intangible assets of a             
          home health agency.”  His conclusions, however, fail to account             





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