Johann T. and Johanna Hess - Page 16

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          statutory notices of deficiency issued to Mr. Hess and Mrs. Hess,           
          respondent determined that the fair market value of HII stock was           
          $253,000 per share on the date of the gift.  Petitioners’ expert,           
          Gregory S. Heebink, concluded that the fair market value of HII             
          stock was $128,000 per share.  Respondent’s expert, Eric                    
          Engstrom, concluded that the fair market value of HII stock was             
          $269,000 per share.15                                                       
               We are not bound by the opinion of any expert witness, and             
          we may accept or reject expert testimony in the exercise of sound           
          judgment.  Estate of Newhouse v. Commissioner, 94 T.C. 193, 217             
          (1990).  Further, we are entitled to accept the opinion of one              
          party’s expert over the opinion of the other party’s expert, and            
          we are also entitled to accept certain portions of the opinion of           
          an expert while rejecting the remaining portions.  McCord v.                
          Commissioner, 120 T.C. 358, 374 (2003).  Moreover, the figure at            
          which we arrive need not be directly traceable to specific                  


               14(...continued)                                                       
          gift tax returns were made on the basis of an appraisal by Gary             
          G. Gaynor, petitioners’ and HII’s accountant and tax adviser.               
          Mr. Gaynor concluded that the fair market value of a minority               
          interest in HII’s stock as of July 31, 1995, was $120,000 per               
          share.  Petitioners request that we consider Mr. Gaynor’s                   
          conclusion because he was very familiar with HII’s business.  We            
          do not consider Mr. Gaynor’s conclusion in our determination of             
          the value of the HII shares.  Mr. Gaynor was not offered as an              
          expert, his report was not accepted as the report of an expert              
          witness, and he did not testify at trial.                                   
               15Respondent does not request that we find an additional               
          deficiency on the basis of his expert’s conclusion.                         




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