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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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