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Notices of Deficiency
Respondent issued separate notices of deficiency to
petitioners.4 Petitioners thereafter timely filed petitions with
this Court objecting to the notices of deficiency.
Respondent agreed with E&Y’s freely traded values of Huber
shares; however, respondent took issue with the appropriate
discount for lack of marketability because of a report by
respondent’s expert, Appraisal Economics, Inc. While E&Y has
always applied a 50-percent discount since its employment with
Huber in 1993, respondent’s expert applied a 30-percent discount
for 1997, a 25-percent discount for 1998, a 45-percent discount
for 1999, and a 30-percent discount for 2000. The discrepancies
in valuation of the shares are as follows:
Year Petitioners’ Value Respondent’s Value
1997 $45.75 $64.05
1998 51.50 77.25
1999 47.50 52.25
2000 58.00 81.20
Respondent also rejected the E&Y values because he
determined the sales at these values were not arm’s-length
transactions. The threshold issue at trial was whether there
4Respondent issued separate notices of deficiency
determining deficiencies in the gift tax of petitioners Michael
A. and Caroline P. Huber for the tax years 1997, 1998, 1999, and
2000; Tabitha A. Huber for the tax years 1997 and 1998; and Hans
A. and Laurel D. Huber for the tax year 1997.
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Last modified: May 25, 2011