SIMPLOT REVERSED
The Ninth Circuit Court of Appeal' decision on appeal of Estate of Simplot v. Commissioner, 112 T.C. No. 13 (1999) reversed the Tax Court's opinion on the valuation of premium attributed to the voting stock in the J.R. Simplot Co. In essence the Court stated that the buyer of a controlling block of stock would assign a premium for control only if the buyer could obtain an increased economic advantage from control. In this case, any potential for control was considered speculative.
Similarly, the Court found that while 100 percent of the voting shares could exercise control, it is not true that a portion of the voting shares could exercise proportional control. Therefore, the premium was incorrectly calculated even if one could be shown to exist. In essence, the Court found a minority interest in the voting shares was worth no more than a nonvoting interest.
