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contending that CCC’s securities will appreciate, increasing the
future tax payments and thereby obviating the need to discount.
The estate’s expert, in an effort to support this theory,
testified that if the premise is that the liquidation or sale of
substantially all of a corporation’s assets would occur in the
future, there should also be:
a long term projection * * * that the stock will
appreciate. If the stock appreciates, the capital
gains tax liability will appreciate commensurate [sic].
The present value of the capital gains tax liability
will be the same. Only if you assume there’s no
appreciation in the stock would you discount the
capital gains tax. And that’s a completely
unreasonable assumption.
Thus, the estate through its expert, Mr. Frazier, contends that
irrespective of the unlikelihood of liquidation there should be a
dollar-for-dollar decrease for the built-in capital gain tax
liability, representing the present value of that liability
because the liability will increase over time. In that regard,
the estate argues that Mr. Shaked incorrectly assumed that the
stock would not appreciate.
In addressing this argument, Mr. Shaked explained that the
need to discount the built-in capital gain tax liability is
analogous to the need to discount carryforward losses because
they cannot be used until years after the valuation year. Mr.
Shaked’s approach is to calculate the built-in capital gain tax
liability by determining when it would likely be incurred. We
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