- 80 -
insurance proceeds (like all other nonoperating assets) had less
than a dollar-for-dollar impact on the final blended value. See
id. at 878.
In the instant case, Mr. Hitchner’s income-based approach,
in recognition of the fact that BCC had substantial nonoperating
assets, employed the well-established technique in such
circumstances of adding nonoperating assets (including life
insurance proceeds) to capitalized earnings.41 In contrast to
the valuation methods employed in Estate of Huntsman, this
approach treats all nonoperating assets alike and results in a
dollar-for-dollar increase in final value equal to the life
insurance proceeds, when used alone, see, e.g., Estate of Heck v.
Commissioner, T.C. Memo. 2002-34, and when blended with an asset-
based approach, see, e.g., Estate of Clarke v. Commissioner, T.C.
Memo. 1976-328. Thus, whether life insurance proceeds produce a
dollar-for-dollar increase in final value depends upon the
valuation methods employed. In observing that life insurance
proceeds “would not necessarily” increase value dollar-for-
dollar, Estate of Huntsman does not preclude this result.
41 As noted previously, but for his conclusion that the life
insurance proceeds were offset by BCC’s obligation to redeem
decedent’s shares, Mr. Fodor’s methodology would also have
dictated adding the life insurance proceeds to capitalized
earnings, because the proceeds would have been a component of his
computation of net working capital.
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