Federal Home Loan Mortgage Corporation - Page 45

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          expected tax payments resulting from the cashflows attributable             
          to the intangible asset and (b) the tax benefits resulting from             
          the amortization of that intangible asset for income tax                    
          purposes.”  At trial, Dr. Hakala was asked to read the two                  
          sentences that immediately followed the sentence he quoted in his           
          rebuttal report:  “‘Including the tax affects [sic] in the                  
          valuation is common in the income and cost approaches.  It is not           
          typical in the market approach because any tax benefits would               
          already be factored into the quoted market price through the                
          negotiation of market participants during the bid and ask                   
          process.’”                                                                  
               Petitioner’s expert, Mr. Howard A. Scribner,19 testified               
          that taxes can affect the value of intangible assets but that the           
          market approach incorporates taxes into the valuation.                      
          Specifically, Mr. Scribner was asked and answered as follows:               
                    Q:   Are taxes relevant or irrelevant in a market-                
               based valuation of an intangible asset?                                
                    A:   A market-based intangible asset reflects the                 
               interactions of buyers and sellers.  All factors,                      
               including taxes, are reflected in those prices.                        
               We agree with petitioner that the market approach of valuing           
          an asset incorporates the effect of taxes.  Respondent’s expert             
          relied on a source that states that the effect of taxes typically           
          is not included in the market approach because the quoted market            


               19 See infra pp. 48-49.                                                




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