The Charles Schwab Corporation and Subsidiaries - Page 39

                                       - 39 -                                         
          reasonable knowledge of relevant facts.18  That standard assumes            
          a hypothetical buyer and seller so as to employ an objective                
          standard that would avoid “the uncertainties that would otherwise           
          be inherent if valuation methods attempted to account for the               
          [idiosyncracies of the particular seller or buyer]”.  Propstra v.           
          United States, 680 F.2d 1248, 1252 (9th Cir. 1982).                         
               Respondent contends that petitioner’s approach to value is             
          not objective and does not take into account the hypothetical               
          buyer and seller standard set forth in the regulations.                     
          Continuing in that vein, respondent contends that petitioner’s              
          expert failed to take into account the intangibles, such as                 
          goodwill, and merely focused on the potential for an income                 
          stream from Rose’s customer accounts.                                       
               Respondent’s wooden reliance on the definition19 of fair               
          market value in section 1.170A-1(c)(2), Income Tax Regs., and               
          section 20.2031-1(b), Estate Tax Regs., misses the point.                   
          Respondent ignores the fact that there was an actual purchase of            
          Rose by a willing buyer who was not under any compulsion to buy--           

               18 We note that respondent made the same argument with                 
          respect to petitioner’s use of its own experience with respect to           
          the useful lives of the acquired Rose accounts.  Our comment with           
          respect to the issue of value apply equally to both arguments.              
               19 Sec. 338 contains no reference to that definition and               
          provides no definition for purposes of the allocation of stock              
          purchase price to acquired assets.  In addition, sec. 338 permits           
          taxpayers to allocate a portion of the acquisition cost to each             
          asset in an amount that does not exceed the fair market value of            
          the asset.                                                                  





Page:  Previous  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  Next

Last modified: May 25, 2011