Estate of Josephine T. Thompson, Deceased, Carl T. Holst-Knudsen and the Bank of New York, Executors - Page 19

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          $35,273,000 to $32,387,730, or from $72.36 per share to $66.45              
          per share ($32,387,730 � 487,440 = $66.45).5                                
               Respondent’s expert’s revised valuation of the estate’s TPC            
          stock interest was necessitated by errors in his original report.           
          In his original valuation, respondent’s expert had added back to            
          his calculation of TPC’s 1997 cashflow (which was the basis for             
          his TPC cashflow estimates for 1998-2002) deferred income taxes             
          of $13,294,000, although the correct amount of deferred taxes               
          that should have been added back to TPC’s 1997 cashflow was only            
          $1,609,793.                                                                 
               Also shortly before trial, the estate’s experts prepared an            
          “updated” or revised valuation report to make the estate’s                  
          original report “more readable”, in which revised report the                
          estate’s experts again opined that the May 2, 1998, date-of-death           
          value of the estate’s TPC common stock was $1,750,000, or $3.59             
          per share.                                                                  
                                       OPINION                                        
               Generally, under section 2031(a) the value of a decedent’s             
          gross estate is based on the fair market value of property owned            
          by the decedent on the date of death.  For Federal estate tax               
          purposes, the term “fair market value” is defined as the price at           
          which property would change hands between a willing buyer and a             

               5  Based on this adjustment, respondent reduced the estate’s           
          tax deficiency to $16,326,408 and the accuracy-related penalty to           
          $6,530,563.                                                                 





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