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form of wine (“While Korbel occupies a specialized niche, it
crushes grapes, ferments the juice and bottles the product like
other producers. To argue that comparables do not exist is
incorrect.”).4
C. Rejection of Mondavi and Canandaigua as Guideline
Companies
Dr. Spiro discussed the similarities and differences between
both Mondavi and Canandaigua and Korbel, and he computed price to
earnings and price to operating cashflow multiples for both
Mondavi and Canandaigua. Nevertheless, when he applied those
multiples to Korbel, he referred only to Mondavi, and he adjusted
downward from the Mondavi figures. We fail to see how
Canandaigua influenced Dr. Spiro’s guideline analysis. It
appears to us that Dr. Spiro, himself, effectively disregarded
Canandaigua as a guideline company. Assuming that to be the
case, respondent has failed to persuade us that we should have
any confidence in Dr. Spiro’s guideline analysis. In Estate of
Hall v. Commissioner, 92 T.C. 312 (1989), the Commissioner’s
expert selected only one comparable company. The proposed
comparable, American Greetings Corp. (American Greetings), was
selected because it, along with Hallmark Cards, Inc. (Hallmark),
4 Dr. Spiro’s oral testimony echoed that view: “Sir, we
selected * * * [Mondavi and Canandaigua] as guideline companies,
as the only game in town. We did not say they were exactly like
Korbel. We say they have the same general production approach.
They have the same general customer base. They are all in the
grape processing business. In that sense they are comparable.”
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