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testimony if it is within the range of values that may be
properly derived from consideration of all the evidence. Id.
After considering the parties arguments, all the facts and
circumstances relevant to this case, and the opinions of
petitioners’ and respondent’s experts, we conclude that the fair
market value of the shares of HII stock that Mr. Hess gave to the
trust falls somewhere in the middle of the range of values
suggested by the parties and their experts.16
Mr. Heebink’s Expert Opinion
Mr. Heebink arrived at a value of $128,000 per share for the
HII stock.17 His valuation relied upon a discounted cashflow
analysis and a market comparable analysis. However, as we
explain in more detail below, Mr. Heebink’s valuation analysis
relies upon an adjustment to HII’s financial information, which
resulted in a significant decrease in HII’s earnings figures for
16Generally, the Commissioner’s determination of fair market
value bears a presumption of correctness, and the burden of
proving that determination is incorrect rests with the taxpayer.
See Rule 142(a). However, in certain circumstances, the burden
of proof as to that determination shifts to the Commissioner
under sec. 7491(a). Petitioners do not argue that sec. 7491(a)
applies, and the record does not disclose the date the
examination commenced.
17Mr. Heebink prepared four reports for this case. He
determined the fair market value of HII shares as of Nov. 11,
1995; he prepared a supplemental report in which he addressed
items that respondent’s expert relied upon in his report; he
valued HII shares as of Feb. 26, 1995, the date the redemption
agreement was executed; and he valued the 8-year covenant as of
that date.
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