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argument that respondent improperly reduced ZSI’s assets’ book
values. We also are unpersuaded by petitioner’s assertion that
respondent improperly depreciated assets not yet acquired. The
record does not support petitioner’s assertion. At no point do
respondent’s projections anticipate ZSI’s accumulated
depreciation exceeding the cumulative costs of ZSI’s capital
assets. We note that although respondent projected annual
depreciation to exceed annual capital expenditures in 1995, 1996,
and 1997, ZSI’s assets’ book values were sufficient to
accommodate that depreciation. Petitioner has not supplied us
with any historical cost or depreciation information regarding
assets that ZSI held on the valuation date, or that it could be
expected to hold thereafter, and, because of this dearth of
information, petitioner’s argument and projections on this point
lack any evidentiary foundation.
Finally, in arguing that proper appraisal methodology
“usually” calls for ZSI’s capital expenditures to be relatively
equal to ZSI’s depreciation, petitioner ignored the reality of
ZSI’s situation. Mr. Rhoads was a frugal manager and president,
and he ran ZSI’s operations so as to keep costs at a minimum.
Most of ZSI’s repair work was done in-house, and the machines
were observed and maintained around the clock to ensure their
continued operation. Mr. Rhoads cannibalized machines to keep
other machines operational for as long as possible, and he
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