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ATI used the NAV approach and the income approach in
determining the proper valuation of decedent’s interests. ATI
gave 80-percent weight to the NAV approach and 20-percent weight
to the income approach.5
ATI appraised decedent’s 94.83-percent limited partnership
interest in KLLP at a fair market value of $521,565, applying a
53.5-percent valuation discount to the adjusted NAV of KLLP, and
appraised decedent’s one-third interest in KLBP LLC at $1,833.33,
also applying a 53.5-percent valuation discount.
c. Respondent’s Expert
Respondent submitted an expert report prepared by Raymond F.
Widmer (Dr. Widmer). Dr. Widmer has a bachelor of arts degree in
economics, a master of business administration degree with a
concentration in economics and quantitative methods, and a Ph.D.
in economics.
Dr. Widmer used the NAV approach and valued the interests
using a 25.2-percent valuation discount. Applying this discount,
Dr. Widmer determined a value of $869,970 for the 94.83-percent
limited partner interest in KLLP and $3,055 for the one-third
interest in KLBP LLC.
5 At trial, the estate’s expert, Mr. Lint, admitted that
the income approach calculation in the ATI report was incorrect
because, among other problems, it did not compound the earnings
each year.
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Last modified: May 25, 2011