Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 76

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          question of how those proceeds should be taken into account when            
          valuing BCC.  Section 20.2031-2(f), Estate Tax Regs., provides              
          that “consideration shall also be given to nonoperating assets,             
          including proceeds of life insurance policies”.  As we stated in            
          Estate of Huntsman v. Commissioner, supra at 874, “it is * * *              
          obvious that the price paid by a willing buyer would not                    
          necessarily be increased by the amount of the life insurance                
          proceeds.”  Rather, one applies “customary principles of                    
          valuation” to determine the impact of life insurance proceeds on            
          corporate value.  Id. at 876.  Here both experts contend that               
          BCC’s value should be determined using a blend of income- and               
          asset-based approaches, and the impact of the insurance proceeds            
          on BCC’s value depends on how those proceeds are treated under              
          those approaches.                                                           
               Where a corporation has significant nonoperating assets, one           
          well-established method of accounting for those assets in an                
          income-based approach-–and the method proposed by Mr.                       
          Hitchner-–is to add the value of those assets to capitalized                
          earnings.  See, e.g., Estate of Heck v. Commissioner, T.C. Memo.            
          2002-34; Estate of Renier v. Commissioner, T.C. Memo. 2000-298;             
          Estate of Ford v. Commissioner, T.C. Memo. 1993-580, affd. 53               
          F.3d 924 (8th Cir. 1995); Estate of Gillet v. Commissioner, T.C.            
          Memo. 1985-394; Estate of Clarke v. Commissioner, T.C. Memo.                

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