Estate of Lewis A. Bailey, Deceased, Frances Jeanette Foster, Executrix - Page 29

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          that this estimated potential gain had a present value of                   
          $613,552, after applying an assumed 8-percent discount rate.                
          Comparing this estimated present value of tax with C&L Bailey’s             
          adjusted net asset value as of the date of decedent’s death,                
          Smith concluded that the appropriate rate of discount for tax on            
          built-in gains was 21.44 percent.                                           
               Smith offered no explanation or support for any of the many            
          assumptions that he utilized in the just-described analysis.  Nor           
          did he offer any explanation or support for his conclusion that             
          the discount related to stock sale costs should be 6 percent.  An           
          expert report that is based on estimates and assumptions not                
          supported by independent evidence or verification is of little              
          probative value or assistance to the Court.  See Rose v.                    
          Commissioner, 88 T.C. 386, 418 (1987), affd. 868 F.2d 851 (6th              
          Cir. 1989); Parker v. Commissioner, 86 T.C. 547, 561 (1986); see            
          also Klapmeier v. Telecheck Intl., Inc., 482 F.2d 247, 252 (8th             
          Cir. 1973).  “The persuasiveness of an expert’s opinion depends             
          largely upon the disclosed facts on which it is based.”  Estate             
          of Davis v. Commissioner, 110 T.C. 530, 538 (1998).                         
          Consequently, we find Smith’s report unpersuasive in its                    
          determination of appropriate discounts for tax on built-in gains            
          or stock sale costs.  We deem respondent to have conceded,                  
          however, that a combined discount of at least 27.44-percent is              
          appropriate with regard to these factors.                                   

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