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corporation that owned rental realty (shopping centers). Estate
of Borgatello v. Commissioner, T.C. Memo. 2000-264. As part of a
weighting of factors to arrive at a discount, the Commissioner’s
expert calculated the potential for appreciation in the real
estate market and the amount of built-in capital gain tax
liability. This Court, to some extent, relied on the expert’s
methodology in its holding on value. In the other case relied
upon by the estate, although the Commissioner’s expert advanced a
similar analysis, this Court rejected that expert’s approach as
an unsubstantiated theory. Estate of Bailey v. Commissioner,
T.C. Memo. 2002-152.
The guidance of the expert was rejected in one of the cases
cited by petitioner and was part of a discounting approach to
assist the finder of fact (Court) to decide upon a discounted
value in the other case. Although the expert’s guidance in the
latter case was considered in reaching a factual finding, the
expert’s approach does not represent the ratio decidendi of the
case. In our consideration of the value of the marketable
securities in this case, we are not bound to follow the same
approach used by an expert in other cases. More significantly we
do not find that approach to be appropriate in this case.
Therefore, we find that in valuing decedent’s 6.44-percent
interest, CCC’s net asset value need not be reduced by the entire
$51,626,884 potential for built-in capital gain tax liability and
that future appreciation of stock need not be considered. We
find Mr. Shaked’s use of a 13.2-percent discount rate to be
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