-4- Johnson issued the appraisal to Dean solely to assist the management of Glenwood Bank in making a cash purchase of the shares. The appraisal was prepared on behalf of Seim Johnson by Dennis R. Hein (Hein) and concluded that the fair market value of the 116 Glenwood Bank shares held by the estate was $878,004 ($7,569 per share) as of December 31, 1996. The appraisal stated that this fair market value included a 29-percent discount for minority interest and a 35-percent discount for lack of marketability. The estate declined to sell its Glenwood Bank shares to Dean at this appraised price. The estate sold those shares to Bancorporation on October 24, 1997, for $1.1 million ($9,483 per share). On July 18, 2001, respondent issued to the estate a notice of deficiency in which he determined, among other things, that the fair market value of decedent’s 116 Glenwood Bank shares was $1.1 million. The notice states that “The value of the decedent’s stock was adjusted to the fair market value as determined by Shenehon Company.” At trial, respondent called William C. Herber (Herber) as an expert witness, and the Court over the objection of petitioners recognized him as an expert on the valuation of financial institutions. The Court also over the objection of petitioners accepted into evidence Herber’s expert report under Rule 143(f) (Shenehon report), written on behalf of his employer, ShenehonPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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