Estate of Helen A. Deputy, Deceased, William J. Deputy, Co-Executor - Page 33

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          difficulties in connection with the Deputy family.  Accordingly,            
          five discount points would be more appropriate to reflect the               
          restriction situation in these cases.                                       
               Finally, the sixth category, which addresses dividend payout           
          history, seems to address the return on capital factor.  In this            
          category, Mr. Dorman selected the poorest rating of 14 discount             
          points from an arithmetic progression by 3, ranging from 2 to 14.           
          His reason for the rating is that Godfrey has not paid any                  
          dividends and it is unlikely that any will be paid in the future.           
          However, the actual payment of dividends is not the sole measure.           
          The potential to pay dividends must also be considered.  A return           
          may also be expected in the form of increase in the value of the            
          investment or potential for capital gain.  In other words,                  
          prospective earning power is important.  See sec. 20.2031-2(f),             
          Estate Tax Regs.; Rev. Rul. 59-60, 1959-1 C.B. 237.                         
               Mr. Dorman’s analysis completely ignores any potential for             
          gain due to increase in value.  Godfrey’s financial performance             
          and future prospects would likely result in an increase in the              
          investment value.  The lack of dividends, when factored with the            
          prospect of capital appreciation, would place Godfrey’s return              
          potential more in the middle range.  Accordingly, 8 discount                
          points would seem a better match than the 14 discount points                
          attributed by Mr. Dorman to this aspect.                                    







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