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Petitioner is aware of the approach used in Gianaris;
however, he contends that the result in this case differs because
the economic projections demonstrate that the requisite profit
objective existed. As an initial matter, we emphasize that
calculating net present value by using the assumptions and
figures from the PPM results in a negative present value after
discounting future cashflows by applying the risk-free rate of
return (without applying any risk premiums) and disregarding tax
considerations. The only way that petitioner can overcome this
fact is by manipulating some of the assumptions contained in the
PPM, most notably by arguing that the EMS had a longer useful
life.
The PPM contains assumptions and projections, some of which
the parties do not dispute. Additionally, both parties submitted
expert reports in support of their respective positions. While
we are not bound by the opinion of any expert witness, we may
accept or reject expert testimony, using our own judgment.
Helvering v. Natl. Grocery Co., 304 U.S. 282, 295 (1938); Estate
of Newhouse v. Commissioner, 94 T.C. 193, 217 (1990). Generally,
we disregard expert testimony that states legal conclusions
and/or does not assist the Court to understand the evidence or
determine a fact in issue. See, e.g., Sunoco, Inc. v.
Commissioner, 118 T.C. 181, 183 (2002); Laureys v. Commissioner,
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