Estate of Frazier Jelke III, Deceased, Wachovia Bank, N.A., f.k.a. First Union National Bank, Personal Representative - Page 18

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               The Court of Appeals for the Fifth Circuit, in reversing our           
          holding in Estate of Dunn, held that the use of an asset-based              
          approach to value assets generally assumes a sale of all                    
          corporate assets or a liquidation of the corporation on the                 
          valuation date, requiring a dollar-for-dollar reduction for the             
          entire built-in capital gain tax liability as a matter of law.              
          Estate of Dunn v. Commissioner, 301 F.3d at 351-353.8  The Court            
          of Appeals also concluded that the likelihood of liquidation had            
          no place in a court’s decision as to whether there should be a              
          reduction for built-in tax liability under either the asset-based           
          approach or the earnings-based approach.  Id. at 353-354.  The              
          Court of Appeals did indicate, however, that the likelihood of              
          liquidation would be relevant in assigning relative weights to              
          the asset and earnings approaches where both methods would be               
          used to determine value.  Id. at 354-357.                                   
               With that background, we proceed to consider the                       
          circumstances and arguments in this case.  The estate reported              
          $4,588,155 as the discounted value of the CCC interest.                     
          Respondent determined that the discounted value of the CCC                  
          interest was $9,111,111.  Although the estate’s expert, Mr.                 
          Frazier, concluded that the discounted value of the CCC interest            
          was $4,301,000, the estate is not seeking a value less than that            
          reported on the estate tax return.  Likewise, respondent relies             


               8 However, the Court of Appeals for the Fifth Circuit                  
          stated that consideration of built-in capital gain would be                 
          inappropriate in an earnings-based approach to value.                       




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