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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
deficiency.
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