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Commissioner, 110 T.C. 530, 559 (1998). The assumptions of
petitioner’s witnesses that a hypothetical buyer and seller would
assume without any supporting evidence that those events would
occur detracts from the credibility of their opinions. See Gross
v. Commissioner, 272 F.3d at 351-355.
Petitioner contends that the testimony of Oliver and
Nammacher establishes that a hypothetical willing buyer would
tax-affect earnings in valuing DGA stock. We disagree.
i. Oliver’s Testimony
Oliver initially testified that MPI tax-affected DGA’s
earnings to apply C corporation tax rates and later testified
that MPI reduced DGA’s earnings to reflect individual income tax
rates. Oliver was substantially unfamiliar with the MPI report.10
The MPI report contained passages lifted verbatim from the Empire
report. We give Oliver’s testimony little weight.
9(...continued)
distributed. We said that, in determining the present value of
an expected stream of earnings, any tax-affecting to reflect the
shareholder-level tax burden should be done equally (or not at
all) to both the discount rate and the expected cashflows, with
the result that, in either case, the present value determined
would be the same. That analysis is independent of the
proportion of earnings distributed.
10 Petitioner also called Hassan, another MPI employee, as
a witness. However, Hassan did not testify about tax-affecting,
executive compensation, or discounts.
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