-32-
3. Analysis
We have several significant concerns about the reliability
of Dr. Hakala’s report. These concerns lead us to place no
weight on Dr. Hakala’s report as evidence of the value of the
Kohler stock the estate held. We have previously discussed the
lack of customary certification of Dr. Hakala’s report and that
his report was not prepared in accordance with all USPAP
standards. We also have already noted that Dr. Hakala admitted
that his original report submitted to the Court before trial
overvalued the estate’s Kohler stock by $11 million, or more than
7 percent of the value he finally decided was correct. This is
not a minor mistake. When we doubt the judgment of an expert
witness on one point, we become reluctant to accept the expert’s
conclusions on other points. Brewer Quality Homes, Inc. v.
Commissioner, T.C. Memo. 2003-200, affd. 122 Fed. Appx. 88 (5th
Cir. 2004).
Moreover, we are convinced from his report and trial
testimony that Dr. Hakala did not understand Kohler’s business.
He spent only 2-1/2 hours meeting with management. He decided
the expense structure in the company’s projections was wrong and
decided to invent his own for his income approach analysis. He
did not discuss his fabricated expense structure with management
to test whether it was realistic. Dr. Hakala also decided to
weight the operations plan model 80 percent and the management
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