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374 (2003); Estate of Newhouse v. Commissioner, 94 T.C. 193, 217
(1990).6
In this case, the estate’s experts impress us as too
inexperienced, accommodating, and biased in favor of the estate.
Respondent’s expert appears to have selected his comparable
companies in a casual manner, based only on broad industry
classification factors. He made significant errors in his
calculations and analysis, and he made questionable and
inadequately explained adjustments in his discounted cashflow
valuation method.
The Estate’s Valuation
As stated, in their original and revised valuation reports
the estate’s experts from Alaska calculated a total date-of-death
value of $1,749,709 ($3.59 per share) for the estate’s 20-percent
common stock interest in TPC. In arriving at this number, the
estate’s experts concluded that no companies existed that were
6 Under sec. 7491, where a taxpayer produces credible
evidence and otherwise satisfies the requirements of sec.
7491(a)(2), the burden of proof with respect to a factual issue
relevant to ascertaining the taxpayer’s tax liability (such as
the fair market value of property) may shift from the taxpayer to
respondent. Herein, in preparation for trial, the parties
stipulated that the estate satisfied the requirements set forth
in sec. 7491(a)(2). At trial, we determined that for purposes of
sec. 7491(a)(1), the evidence produced by the estate as to the
valuation of the TPC stock was to be treated as credible
evidence. Therefore, respondent has the burden of proof with
regard to the valuation of the estate’s 20-percent stock interest
in TPC.
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