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Accordingly, and unlike the situation in Estate of Dunn,
decedent’s 6.44-percent interest in CCC would be insufficient to
cause liquidation.
The estate also argued that CCC’s relatively low earnings
and modest dividends would cause a hypothetical buyer to prefer
liquidation. We are unpersuaded by the estate’s supposition,
which is contradicted by the record in this case. CCC performed
well and kept pace with the S&P 500, defying the notion that it
is an underperforming company. An investor may seek gain from
dividends, capital appreciation, or a combination of the two.
Accordingly, we hold that neither the circumstances of this case
nor the theory or method used to value the minority interest in
CCC requires an assumption of complete liquidation on the
valuation date.11
Having held that an assumption of complete liquidation on
the valuation date does not apply in this case, we must consider
the amount of the reduction to be allowed for the built-in
capital gain tax liability. Respondent’s expert began with the
total amount of built-in capital gain tax liability
($51,626,884); and after determining when the tax would be
incurred, he discounted the potential tax payments to account for
time value principles. The estate attacks that approach by
11 We also note that we do not assume a rate of return lower
than our discount rate, as we were said to have done in Estate of
Jameson v. Commissioner, 267 F.3d 366, 372 (5th Cir. 2001), revg.
T.C. Memo. 1999-43. Accordingly, our assumption of continuing
operations is not “internally inconsistent”. Id.
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