Advanced D P Chapter Ten Review Questions
Advanced Discounts and Premiums
CLOSE LOOK AT MANDELBAUM DECISION
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER 10 REVIEW QUESTIONS
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
Chapter Ten – 7
CLOSE LOOK AT MANDELBAUM DECISION
Advanced Discounts and Premiums
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER REVIEW QUESTIONS Chapter 10: A Close Look at the Mandelbaum Decision and Its Effect on Marketability 1.
Judge Laro in Mandelbaum v. Commissioner allowed the use taxpayer’s analysis of ten specific restricted stock and pre-IPO studies in the final determination of the discount for lack of marketability. a. b.
2.
Regarding the nine factors considered by the court in Mandelbaum v. Commissioner to increase or decrease the benchmark discount, which of the following statements is true? a. b.
c.
d.
3.
Holding period, redemption policy, and control inherent in transferred shares were determined to be neutral factors by the court in determination of the benchmark discount. The court determined that financial statement analysis, dividend policy, company history, position and economic outlook, and management were the four factors decreasing the benchmark discount. The court determined that financial statement analysis, dividend policy, company history, position and economic outlook, management, and redemption policy were the five factors decreasing the benchmark discount. The court determined the nine factors which would either increase or decrease the benchmark discount to be financial statement analysis, dividend policy, nature of the company, management, amount of control in the transferred shares, restrictions on transferability, holding period for the stock, company’s redemption policy, and costs associated with a public offering.
Which court case specifically isolates the issue of marketability discounts? a. b. c. d.
4.
True False
Simplot Estate of Kelly Mandelbaum Gross
Which of the following would reduce the discount for lack of marketability based on the nine factors discussed in the Mandelbaum case? a. b. c. d.
Low dividends and an elaborate management structure Transfer restrictions on the shares being valued and an imminent public offering High premiums for control paid in the subject company’s industry Company is a leader in their industry with a bright economic outlook and has a history of paying dividends
8 – Chapter Ten
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
CLOSE LOOK AT MANDELBAUM DECISION
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER 10 REVIEW QUESTIONS
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
Chapter Ten – 7
CLOSE LOOK AT MANDELBAUM DECISION
Advanced Discounts and Premiums
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER REVIEW QUESTIONS Chapter 10: A Close Look at the Mandelbaum Decision and Its Effect on Marketability 1.
Judge Laro in Mandelbaum v. Commissioner allowed the use taxpayer’s analysis of ten specific restricted stock and pre-IPO studies in the final determination of the discount for lack of marketability. a. b.
2.
Regarding the nine factors considered by the court in Mandelbaum v. Commissioner to increase or decrease the benchmark discount, which of the following statements is true? a. b.
c.
d.
3.
Holding period, redemption policy, and control inherent in transferred shares were determined to be neutral factors by the court in determination of the benchmark discount. The court determined that financial statement analysis, dividend policy, company history, position and economic outlook, and management were the four factors decreasing the benchmark discount. The court determined that financial statement analysis, dividend policy, company history, position and economic outlook, management, and redemption policy were the five factors decreasing the benchmark discount. The court determined the nine factors which would either increase or decrease the benchmark discount to be financial statement analysis, dividend policy, nature of the company, management, amount of control in the transferred shares, restrictions on transferability, holding period for the stock, company’s redemption policy, and costs associated with a public offering.
Which court case specifically isolates the issue of marketability discounts? a. b. c. d.
4.
True False
Simplot Estate of Kelly Mandelbaum Gross
Which of the following would reduce the discount for lack of marketability based on the nine factors discussed in the Mandelbaum case? a. b. c. d.
Low dividends and an elaborate management structure Transfer restrictions on the shares being valued and an imminent public offering High premiums for control paid in the subject company’s industry Company is a leader in their industry with a bright economic outlook and has a history of paying dividends
8 – Chapter Ten
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
