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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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