Herbert V. Kohler, Jr., et al. - Page 32

                                        -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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