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dribble-out period. Below we analyze the experts’ methods for
valuing the estate’s Reliance shares under the dribble-out
method.
(1) Range Report
By multiplying the estate’s Reliance shares by the $20.625
valuation date closing trading price (see supra note 5), Range
calculates the dribble-out sales proceeds for the estate’s
Reliance shares to be $73,186,781.6 Using a risk-free rate of
return, Range then discounts the $73,186,781 sales proceeds to a
$65,764,163 present value as of the June 5, 2000, valuation date.
Range further concludes that a hypothetical investor
dribbling out the estate’s Reliance shares would purchase put
options to enable the Reliance shares to be sold at the valuation
date price throughout the dribble-out period. Range calculates a
$10,494,345 cost for put options that would allow the Reliance
shares to be sold for $20.625 a share throughout the entire
dribble-out period. Range then subtracts from his $65,764,163
present value for the estate’s dribbled out Reliance shares his
$10,494,345 estimated cost for the put options, resulting in a
net dribble-out discounted value of $55,269,818, reflecting a
6 Range’s report considers only the 3,548,450 Reliance
shares held in trust. On the estate’s estate tax return,
however, the estate applies to all of the estate’s 3,601,267
Reliance shares the same discount that Range applies to the
Trusts’ 3,548,450 shares.
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