The Charles Schwab Corporation and Subsidiaries - Page 41

                                       - 41 -                                         
               property’s adaptability to a particular business.                      
               Stanley Works v. Commissioner, supra at 400 [87 T.C.                   
               389 (1986)].  Acknowledging the existence of such                      
               businesses in the universe of hypothetical buyers also                 
               is consistent with the standard that assets are not                    
               valued in a vacuum but, instead, are valued at their                   
               highest and best use.                                                  
               Respondent would have us ignore the arm’s-length sale                  
          between petitioner and Chase and instead attempt to estimate some           
          price of each individual asset, assuming it had value or that               
          there was a buyer willing to pay more than petitioner.                      
          Petitioner’s evaluation of Rose’s assets was conducted in the               
          context of an actual transaction where the constraints of the               
          marketplace were brought to bear on petitioner’s approach to                
          value.20  In that regard, petitioner’s valuation was also                   
          contemporaneously conducted under actual business conditions, and           
          we accept it at face.  In this situation, there is no need to               
          conjure up a hypothetical buyer who is ignorant of the facts or             
          to attempt to place a value on goodwill where it did not exist.             
               To better understand the differences in value proposed by              
          the parties, we consider their experts’ reports and approaches.             
          In reaching our holdings on fair market value, we consider the              
          expert witnesses’ reports.  It is within this Court’s discretion            

               20 Respondent’s expert concluded that $35 million of the               
          $181,376,869 MADSP represented goodwill.  The facts reflect that            
          the Rose business was a service business which did not rely on              
          capital, and its customers were the heart of its value.  The Rose           
          entity was financially troubled and did not have the intrinsic              
          goodwill of a going concern.                                                





Page:  Previous  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  Next

Last modified: May 25, 2011