Estate of Lewis A. Bailey, Deceased, Frances Jeanette Foster, Executrix - Page 13

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               Respondent’s Expert                                                    
               Respondent’s expert, Smith, valued decedent’s C&L Bailey               
          stock on the basis of the adjusted book value of the                        
          corporation’s net assets.2  In doing so, he adopted without                 
          change the appraised values of the California motel and the                 
          Arkansas motel as reflected in the Ohrmund report and the                   
          original Biles report, respectively.  Like the Ohrmund report,              
          Smith’s report makes no adjustment in the California motel value            
          for decedent’s individual one-half ownership interest in parcel             
          2.  In determining a $415,319 value for decedent’s 50 shares of             
          C&L Bailey stock, Smith allowed a 20-percent minority-interest              
          discount and a 27.44-percent discount for lack of marketability.            
               Petitioner’s Experts                                                   
               Petitioner offered two expert witnesses:  (1) Richard L.               
          Schwartz (Schwartz), who is a certified public accountant and               
          certified business appraiser; and (2) Biles, who, as previously             
          discussed, is the Arkansas appraiser who prepared the original              
          Biles report valuing the Arkansas motel.                                    
               Like Smith, Schwartz valued decedent’s C&L Bailey stock by             
          reference to the adjusted book value of the corporation’s net               
          assets.  Like Smith, Schwartz adopted the appraised value of the            

               2 As previously discussed, Dennis C. Smith (Smith) also                
          prepared the October 1996 valuation report from which respondent            
          derived the C&L Bailey stock values reflected in the notice of              

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