Estate of Pinkerton v. Commissioner

ESTATE OF AIRDRIE K. PINKERTON, DECEASED, ROY D. PINKERTON, ET. AL., EXECUTOR, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Estate of Pinkerton v. Commissioner Docket No. 2066-69. United States Tax Court T.C. Memo 1974-71; 1974 Tax Ct. Memo LEXIS 247; 33 T.C.M. (CCH) 342; T.C.M. (RIA) 74071; March 26, 1974, Filed. Jack M. Harrison and Raymond L. Heidemann, for the petitioner. Melvern Stein, for the respondent. TIETJENS MEMORANDUM FINDINGS OF FACT AND OPINION TIETJENS, Judge:* The Commissioner determined a deficiency of $92,166.95 in the Federal estate tax of Airdrie K. Pinkerton (hereafter decedent). 1 *248 The issues for decision are: (1) the value of certain shares of stock owned by decedent at her death; and (2) the extent to which decedent's funeral expenses may be deducted from her gross estate. FINDINGS OF FACT The stipulated facts are so found and are incorporated herein by this reference. Decedent, a resident of Ojai, California, died testate on June 26, 1966. Roy D. Pinkerton (hereafter petitioner), of Ojai, California, Airdrie Paula Martin, of Ojai, California, and Roy H. Pinkerton, of Sacramento, California, are the duly appointed, qualified and acting executors of decedent's will. On or about May 8, 1967, petitioner filed a Federal estate tax return with the district director of internal revenue at Los Angeles, California, and elected to use the date of decedent's death as the date of valuation of the estate. Decedent's estate was administered under the jurisdiction of California. Decedent's funeral expenses of $510.50 were paid by decedent's estate. At the time of her death, decedent owned a one-half community property interest in the following shares of corporate stocks: (a) 16 shares of Class A capital stock of John P. Scripps Newspapers. (b) 16*249 shares of Class B capital stock of John P. Scripps Newspapers. (c) 10 shares of Class A capital stock of Tulare Newspapers, Inc. (d) 10 shares of Class B capital stock of Tulare Newspapers, Inc. (e) 10 shares of Class A capital stock of Watsonville Newspapers, Inc. (f) 10 shares of Class B capital stock of Watsonville Newspapers, Inc. (g) 10 shares of Class A capital stock of Redding Record, Inc. (h) 30 shares of Class B capital stock of Redding Record, Inc. The Class A, no par capital stock of each of the four corporations is voting stock whereas the Class B is non-voting. In all other respects there is no distinction between the Class A and Class B stock of any of the corporations. There have never been any sales of shares of capital stock of any of the four subject corporations from which the fair market value of such shares could be determined as of June 26, 1966. John P. Scripps Newspapers John P. Scripps Newspapers (hereafter Scripps), was incorporated under the laws of the State of California in 1935. From March 1935 until the date of decedent's death, the issued and outstanding capital stock of Scripps was owned as follows: Class A, no-par shares Class B, no-par shares Total Decedent and her surviving husband, Roy D. Pinkerton, as community property — 16 — — 16 — — 32 — John P. Scripps — 64 — — 32 — — 96 — Edgar F. Elfstrom and Thelma A. Elfstrom, Trustees — 16 — — 16 — — 32 — Totals — 96 — — 64 — — 160 — *250 As of June 26, 1966, Scripps published the daily Ventura County Star-Free Press (hereafter the Star-Free Press) in Ventura, California, and the daily News-Chronicle in Thousand Oaks, California. The Star-Free Press was acquired by Scripps in 1946 although it was started as a daily newspaper by Roy D. Pinkerton on June 15, 1925. The News-Chronicle is the successor of the Conejo News, a weekly newspaper purchased by Scripps in 1961. The Star-Free Press is circulated throughout Ventura County, California, and the News-Chronicle is circulated in Southeastern Ventura County. As of June 26, 1966, the Star-Free Press was printed on a six unit Goss letter press which was approximately 40 years old. Throughout the industry, letter presses were becoming obsolete and were being replaced by more modern offset presses. The market for used letter presses was very depressed. As of June 26, 1966, the News-Chronicle was printed on a three unit offset press. The News-Chronicle operated from two different buildings, one of which was an old, remodeled church which had become inadequate for the newspaper's needs. It was not adaptable to remodeling, and the cost of replacing it was estimated*251 at from $150,000 to $200,000. As of June, 1966, there were profit-sharing agreements in existence between Scripps and certain of its key employees. On December 7, 1965, the executive committee of Scripps increased the reserve account from $350,000 to $400,000 from its earned surplus to provide for its liability under the profit-sharing agreements. The following schedules reflect certain information relevant to our determination of the value of decedent's interest in Scripps: (1) John P. Scripps Newspapers Net Income Before Federal Income Taxes Federal Income Taxes Dividends Paid — 1956 — $235,507 $115,595 $ 38,400 — 1957 — 231,239 114,709 38,400 — 1958 — 244,319 121,250 38,400 — 1959 — 304,759 151,949 38,400 — 1960 — 315,262 157 ,258 76,800 — 1961 — 350,721 175,642 76,800 — 1962 — 232,326 114,076 76,800 — 1963 — 227,006 111,296 76,800 — 1964 — 141,322 42,091 76,800 — 1965 — 264,817 111,709 76,800 — 1966 — 242,585 106,739 76,800 (2) Ventura County Star-Free Press Total Revenues Net Operating Profit Average Paid Daily Circulation Total Pages Printed Total Advertising Inches — 1956 — $1,071,561 $237,693 19,961 7,220 737,812 — 1957 — 1,131,237 237,131 20,342 7,464 749,857 — 1958 — 1 ,206,284 249,056 21,449 7,418 720,278 — 1959 — 1,374,926 306,645 23,182 7,936 796,813 — 1960 — 1,534,811 309,115 23, 995 8,130 837,941 — 1961 — 1,700,785 397,695 24,230 8,462 868,567 — 1962 — 1,767,893 353,332 25,090 8,796 881,181 19 63 1,937,494 385,787 26,208 9,438 903,827 — 1964 — 2,080,790 378,611 27,627 10,236 964,335 — 1965 — 2,338,131 456,496 28,894 10,534 1,020,221 — 1966 — 2,535,362 317,582 29,273 12,170 1,065,433 (3) News-Chronicle Total Revenues Net Operating (Loss) Average Paid Daily Circulation Total Pages Printed Total Advertising Inches 7 months ended December 31, — 1961 — $ 60,661 [50,997) 1,308 — 778 — 63,526 — 1962 — 151,491 (119,884) 2,454 1,636 150,922 1963 * 191,46 2 (154,583) 3,829 2,020 181,857 1964** 244,632 (220,232) 4,662 2,810 198,267 — 1965 — 347,020 (187,636) 4,310 3,540 230,896 — 1966 — 509,111 ( 36,577) 6,285 4,409 326,491 *252 (4) John P. Scripps Newspapers (a) For the Years 1961, 1962, and 1963 — 1961 — — 1962 — — 1963 — Circulation income $ 358,990 $ 384,123 $ 411,168 Advertising income 1,392,824 1,520,708 1,701,932 Miscellaneous income (shopping news circulars, commercial printing, etc.) 9,631 14,553 15,855 Interest income 12,463 7,853 4,009 Dividend income 2,790 2,790 2,790 Gain or (loss) on sale of capital assets (1,155) (40) — 89 — Total Income $1,775,543 $1,929,987 $2,135,843 Operating expense* 1,415,502 1,687,548 1,898,605 Interest expense 9,320 10,113 10,232 Operating profit before Federal income taxes $ 350,721 $ 232,326 $ 227,006 Federal income taxes 175,642 114,076 111,296 Net profit after Federal income taxes $ 175,079 $ 118,250 $ 115,710 *Includes depreciation expense in the amounts of $ 40,350 $ 42,431 $ 42,071 (b) For the years 1964, 1965, and 1966 — 1964 — — 1965 — — 1966 — Circulation income $ 445,719 $ 469,661 $ 550,775 Advertising income 1,861,176 2,125,653 2,387,390 Miscellaneous income (shopping news, circulars, commercial printing) 18,526 170,565 265,965 Interest income 4,485 5,323 4,807 Dividend income 2,790 2,790 2,836 Gain or (loss) on sale of capital assets (276) 1,384 (367) Total Income $2,332,420 $2,775,376 $3,211,406 Operating expense* 2,167,921 2,482,207 2,924,238 Interest expense 23,177 28,352 44,583 Operating profit before federal income taxes $ 141,322 $ 264,817 $ 242,585 Federal income taxes** 42,091 111,709 106,739 Net profit after federal income taxes $ 99,231 $ 153,108 $ 135,846 *Includes depreciation expense in the amounts of $ 53,387 $ 70,717 $ 78,686 **After reduction for investment credits in the amounts of $ 20,385 $ 7,641 $ 2,105 *253 (5) John P. Scripps Newspapers (a) As of December 31, 1961 and 1962 Assets 12/31/61 12/31/62 Cash on hand and in banks $ 208,618 $ 105,591 Securities at cost 85,824 160,824 Notes and accounts receivable - net 315,973 208,368 Inventories and supplies 45,699 41,236 Land, buildings and equipment - net 507,293 657,502 Goodwill - purchased 49,827 49,827 Deferred charge 8,105 7,969 Organization expense — 599 — — 599 — Miscellaneous assets 12,308 — 975 — Total Assets $1,234,246 $1,232,891 Liabilities and Capital Current liabilities $ 182,267 $ 140,409 Notes payable-non-current 163,145 166,510 Prepaid subscriptions 5,379 5,647 Miscellaneous non-current liabilities 10,706 6,127 Reserve for liability under employee profit sharing agreements 350,000 350,000 Capital stock (160 shares) 1,600 1,600 Capital surplus 98,631 98,631 Earned surplus 422,518 463,967 Total Liabilities and Capital $1,234,246 $1,232,891 (b) As of December 31, 1963 and 1964 Assets 12/31/63 12/31/64 Cash on hand and in banks $ 114,252 $ 97,958 Securities at cost 173,162 194,061 Notes and accounts receivable - net 217,189 262,751 Inventories and supplies 42,609 51,710 Land, buildings and equipment - net 638,946 957,925 Goodwill - purchased 49,827 49,827 Deferred charge 8,663 10,040 Organization expense — 599 — — 599 — Miscellaneous assets 56,728 — 90 — Total Assets $1,301,975 $1,624,961 Liabilities and Capital Current liabilities $ 168,269 $ 114,640 Notes payable-non-current 169,415 523,970 Prepaid subscriptions 7,316 7,791 Miscellaneous non-current liabilities 3,867 3,020 Reserve for liability under employee profit sharing agreements 350,000 350,000 Capital stock (160 shares) 1,600 1,600 Capital surplus 98,631 98,631 Earned surplus 502,877 525,309 Total Liabilities and Capital $1,301,975 $1,624,961 (c) As of December 31, 1965 and June 30, 1966 Assets 12/31/65 6/30/66 Cash on hand and in banks $ 175,057 $ 117,625 Securities at cost 194,061 194,061 Notes and accounts receivable - net 323,904 325,298 Inventories and supplies 44,759 60,262 Land, buildings and equipment - net 1,091,831 1,064,634 Goodwill - purchased 274,827 274,827 Deferred charge 62,897 66,519 Organization expense — 599 — — 599 — Miscellaneous assets — 316 — 4,967 Total Assets $2,168,251 $2,108,792 Liabilities and Capital Current liabilities $ 232,358 $ 212,709 Notes payable-non-current 871,606 774,107 Prepaid subscriptions 9,534 11,170 Miscellaneous non-current liabilities 2,905 2,557 Reserve for liability under employee profit sharing agreements 400,000 400,000 Capital stock (160 shares) 1,600 1,600 Capital surplus 98,631 98,631 Earned surplus 551,617 608,018 Total Liabilities and Capital $2,168,251 $2,108,792 *254 (6) Securities owned by John P. Scripps Newspapers as of December 31, 1965, and June 30, 1966 Description Cost $ 50,000 U.S. Treasury bonds - 4% of 8/15/70 $ 50,000 40,000 U.S. Treasury bonds - 2 1/2% of 6/15/69 37,337 20,000 U.S. Treasury bonds - 3 7/8% of 5/15/68 20,000 10,000 U.S. Treasury bonds - 2 1/2% of 12/15/69 10,000 558 shares of 5% Series "A" cumulative preferred stock of E.W. Scripps Company 55,824 100 shares of common capital stock (20% interest) by Entsunews, Inc., publisher of Simi-Enterprise-Sun & News, Simi, California 20,900 Total $194,061 Tulare Newspapers, Inc. Tulare Newspapers, Inc. (hereafter Tulare) was incorporated under the laws of the State of California in 1945. From the date of incorporation until the date of decedent's death, the issued and outstanding capital stock of the corporation was owned as follows: Class A, no-par shares Class B, no-par shares Total Decedent and her surviving husband, Roy D. Pinkerton, as community property — 10 — — 10 — — 20 — John P. Scripps — 80 — — 80 — — 160 — Harry Green — 10 — — 10 — — 20 — Totals — 100 — — 100 — — 200 — As of June 26, 1966, Tulare's principal business activity consisted*255 of the publication of a daily newspaper, the Tulare Advance Register and Tulare Times (hereafter the Register-Times) in Tulare, California. The Register-Times was started as a daily newspaper by Tulare in December 1945. The Register-Times is circulated in Tulare County. As of June 26, 1966, the plant and equipment used in the production of the Register-Times was old and outdated. The Register-Times was printed on a Goss letter press, and, in 1966, the estimated cost of converting to an offset press operation was $300,000. Tulare did not pay any dividends during the years 1956 through 1970. The following schedules reflect certain information relevant to our consideration of the value of decedent's interest in Tulare: (1) Tulare Newspapers, Inc. Net Income Before Federal Income Taxes Federal Income Taxes — 1956 — $16,480 $ 4,944 — 1957 — 11,273 3,382 — 1958 — 23,509 7,053 — 1959 — 21,136 5,741 — 1960 — 34,877 12,636 — 1961 — 10,244 3,073 — 1962 — 12,832 3,850 — 1963 — 1,498 — 444 — — 1964 — 38,393 11,102 — 1965 — 34,550 11,506 — 1966 — 26,087 7,335 (2) Tulare Advance Register and Tulare Times (2) Tulare Advance Register and Tulare Times Total Revenues Net Operating Profit Average Paid Daily Circulation Total Pages Printed Total Advertising Inches — 1956 — $286,144 $ 24,661 4,771 3,454 283,154 — 1957 — 280,708 19,082 4,847 3,432 268,919 — 1958 — 311, 533 31,034 4,819 3,426 274,907 — 1959 — 318,871 16,673 5,047 3,508 271,769 — 1960 — 377,477 42,420 5,018 3,740 290 ,573 — 1961 — 362,652 17,980 5,200 3,728 277,760 — 1962 — 385,629 20,239 5,239 3,896 289,867 — 1963 — 390,294 4,972 5,2 59 4,028 273,175 — 1964 — 416,020 42,153 5,201 3,836 281,859 — 1965 — 433,067 39,725 5,353 3,826 284,406 — 1966 — 461,515 30,832 5,599 4,126 296,728 *256 (3) Tulare Newspapers, Inc. (a) For the years 1961, 1962, and 1963 — 1961 — — 1962 — — 1963 — Circulation income $ 63,189 $ 63,417 $ 67,449 Advertising income 289,328 307,141 308,464 Miscellaneous income (shopping news, circulars, commercial printing, etc.) 10,135 15,071 14,381 Gain on sale of capital assets -0- -02,000 Total Income $362,652 $385,629 $392,294 Operating expense * 344,672 365,391 385,322 Interest expense 7,736 7,406 5,474 Operating income before federal income taxes $ 10,244 $ 12,832 $ 1,498 Federal income taxes 3,073 3,850 — 444 — Net profit after federal income taxes $ 7,171 $ 8,982 $ 1,054 *Includes depreciation expense in the amounts of $ 5,351 $ 5,350 $ 5,297 (b) For the Years 1964, 1965, and 1966 — 1964 — — 1965 — — 1966 — Circulation income $ 74,309 $ 76,647 $ 79,477 Advertising income 322,975 330,488 347,372 Miscellaneous income (shopping news, circulars, commercial printing, etc.) 18,736 25,932 34,666 Interest income -0- -060 Gain on sale of capital assets 1,333 -0- -0Total Income $417,353 $433,067 $461,575 Operating expense * 373,867 393,342 430,682 Interest expense 5,093 5,175 4,806 Operating income before federal income taxes $ 38,393 $ 34,550 $ 26,087 Federal income taxes** 11,102 11,506 7,335 Net profit after federal income taxes $ 27,291 $ 23,044 $ 18,752 *Includes depreciation expense in the amounts of $ 6,167 $ 7,041 $ 7,260 **After reduction for investment credits in the amounts of $ 2,276 $ 78 $ 187 *257 (4) Tulare Newspapers, Inc. (a) As of December 31, 1961 and 1962 Assets 12/31/61 12/31/62 Cash on hand and in banks $ 53,822 $ 39,586 Notes and accounts receivable - net 37,694 41,444 Inventories and supplies 10,111 6,386 Land, buildings and equipment - net 68,964 64,993 Goodwill - purchased 84,630 84,630 Deferred charges 1,730 1,829 Total Assets $256,951 $238,868 Liabilities and Capital Current liabilities $ 18,673 $ 15,026 Notes payable-non-current 129,441 106,035 Prepaid subscriptions 2,827 2,858 Miscellaneous non-current liabilities — 492 — — 448 — Capital stock (200 shares) 2,000 2,000 Earned surplus 103,518 112,501 Total Liabilities and Capital $256,951 $238,868 (b) As of December 31, 1963 and 1964 Assets 12/31/63 12/31/64 Cash on hand and in banks $ 22,523 $ 33,637 Notes and accounts receivable - net 36,817 43,190 Inventories and supplies 6,544 4,345 Land, buildings and equipment - net 61,847 88,030 Goodwill - purchased 84,630 84,630 Deferred charges 1,854 2,144 Total Assets $214,215 $255,976 Liabilities and Capital Current liabilities $ 10,301 $ 23,259 Notes payable-non-current 84,885 86,249 Prepaid subscriptions 3,084 3,062 Miscellaneous non-current liabilities — 390 — — 560 — Capital stock (200 shares) 2,000 2,000 Earned surplus 113,555 140,846 Total Liabilities and Capital $214,215 $255,976 (c) As of December 31, 1965 and June 30, 1966 Assets 12/31/65 6/30/66 Cash on hand and in banks $ 53,022 $ 66,082 Notes and accounts receivable - net 49,697 41,605 Inventories and supplies 6,177 4,927 Land, buildings and equipment - net 82,098 81,740 Goodwill - purchased 84,630 84,630 Deferred charges 2,822 2,334 Total Assets $278,446 $281,318 Liabilities and Capital Current liabilities $ 29,193 $ 17,067 Notes payable-non-current 79,744 80,096 Prepaid subscriptions 3,009 3,516 Miscellaneous non-current liabilities — 610 — — 590 — Capital stock (200 shares) 2,000 2,000 Earned surplus 163,890 178,049 Total Liabilities and Cpaital $278,446 $281,318 *258 Watsonville Newspapers, Inc. Watsonville Newspapers, Inc. (hereafter Watsonville) was incorporated under the laws of the State of California in December 1945. From the date of incorporation until the date of decedent's death, the issued and outstanding capital stock of Watsonville was owned as follows: Class A, no-par shares Class B, no-par shares Total Decedent and her surviving husband, Roy D. Pinkerton, as community property — 10 — — 10 — — 20 — John P. Scripps — 60 — — 60 — — 120 — Harry Green — 10 — — 10 — — 20 — Edgar F. Elfstrom and Thelma A. Elfstrom, Trustees — 20 — — 20 — — 40 — Totals — 100 — — 100 — — 200 — As of June 26, 1966, Wastsonville's principal business activity consisted of the publication of a daily newspaper, the Watsonville Register-Pajaronian (hereafter the Register-Pajaronian) in Watsonville, California. Watsonville acquired the Register-Pajaronian on December 31, 1945. The Register-Pajaronian is circulated in Monterey and Santa Cruz Counties. As of June 26, 1966, old equipment and an inadequate leased building were used in the production of the Register-Pajaronian. The Register-Pajaronian had been printed on letter press but was converted to offset press*259 in 1969 at an approximate cost of $700,000, which included the cost of the property necessary to the conversion. As of June 26, 1966, there were profit-sharing agreements in existence between Watsonville and certain of its key employees. On December 3, 1965, the executive committee of Watsonville increased the reserve account in the amount of $50,000 from its earned surplus to provide for its liability under the profit-sharing agreements. The following schedules reflect certain information relevant to our consideration of the value of decedent's interest in Watsonville: (1) Watsonville Newspapers, Inc. Net Income Before Federal Income Taxes Federal Income Taxes Dividends Paid — 1956 — $ 56,942 $24,110 $ 18,000 — 1957 — 58,637 24,991 18,000 — 1958 — 55,590 23,205 18,000 — 1959 — 58,104 24,106 18,000 — 1960 — 76,284 33,56 0 24,000 — 1961 — 50,702 20,257 24,000 — 1962 — 68,517 29,521 24,000 — 1963 — 76,434 33,524 24,000 — 1964 — 115,710 48,784 24,000 — 1965 — 117,723 48,898 35,000 — 1966 — 110,925 46,070 36,000 (2) Watsonville Register-Pajaronian Total Revenues Net Operating Profit Average Paid Daily Circulation Total Pages Printed Total Avertising Inches — 1956 — $378,691 $ 60,245 7,449 3,908 364,855 — 1957 — 379,968 62,151 7,632 3,796 342,723 — 1958 — 380,879 57, 889 7,749 3,772 340,929 — 1959 — 393,623 57,832 7,905 3,742 328,262 — 1960 — 456,838 74,919 8,133 4,040 347,843 196 1 444,464 48,212 8,287 4,042 338,385 — 1962 — 516,011 67,835 8,389 4,386 367,346 — 1963 — 579,539 75,063 8,471 4,7 94 394,275 — 1964 — 694,936 113,954 8,654 5,370 456,473 — 1965 — 730,650 114,175 8,910 5,468 458,056 — 1966 — 760,692 104,836 9,278 5,586 467,850 *260 (3) Matsonville Newspapers, Inc. (a) For the years 1961, 1962 and 1963 — 1961 — — 1962 — — 1963 — Circulation income $106,320 $106,265 $108,441 Advertising income 333,372 398,007 447,308 Miscellaneous income (shopping news, circulars, commercial printing, etc.) 4,772 11,739 23,791 Interest income 6,588 6,973 6,718 Dividend income 1,375 1,375 1,375 Gain on sale of capital assets -0- (1,171) — 422 — Total Income $452,427 $523,188 $588,055 Operating expense* 396,252 448,176 504,476 Interest expense 5,473 6,495 7,145 Operating income before federal income taxes $ 50,702 $ 68,517 $ 76,434 Federal income taxes 20,257 29,521 33,524 Net profit after federal income taxes $ 30,445 $ 38,996 $ 42,910 *Includes depreciation expense in the amounts of $ 8,488 $ 8,420 $ 7,175 (b) For the years 1964, 1965, and 1966 — 1964 — — 1965 — — 1966 — Circulation income $128,707 $131,452 $135,685 Advertising income 531,016 566,755 599,164 Miscellaneous income (shopping news, circulars, commercial, printing, etc.) 35,213 32,443 25,844 Interest income 6,848 8,158 12,112 Dividend income 1,375 1,375 1,375 Gain on sale of capital assets -03 -0Total Income $703,159 $740,186 $774,180 Operating expense* 580,982 616,474 655,856 Interest expense 6,467 5,989 7,399 Operating income before federal income taxes $115,710 $117,723 $110,925 Federal income taxes** 48,784 48,898 46,070 Net profit after federal income taxes $ 66,926 $ 68,825 $ 64,855 *Includes depreciation expense in the amounts of $ 7,609 $ 8,399 $ 8,651 **After reduction for investment credits in the amounts of $ 1,487 $ 548 $ 113 *261 (4) Watsonville Newspapers, Inc. (a) As of December 31, 1964 and 1962 Assets 12/31/61 12/31/62 Cash on hand and in banks $ 40,203 $ 63,048 Securities at cost 97,629 97,629 Notes and accounts receivable - net 119,276 129,970 Inventories and supplies 9,106 8,690 Land, buildings and equipment - net 58,374 53,255 Goodwill - purchased 104,293 104,293 Deferred charges 1,235 2,676 Total Assets $430,116 $459,561 Liabilities and Capital Current liabilities $ 34,633 $ 49,953 Notes payable-non-current 92,009 93,084 Prepaid subscriptions 7,646 6,776 Miscellaneous non-current liabilities 3,588 2,512 Reserve for liability under employee profit sharing agreements 125,000 125,000 Capital stock (200 shares) 2,000 2,000 Earned surplus 165,240 180,236 Total Liabilities and Capital $430,116 $459,561 (b) As of December 31, 1963 and 1964 Assets 12/31/63 12/31/64 Cash on hand and in banks $ 81,580 $119,732 Securities at cost 115,054 115,054 Notes and accounts receivable - net 105,111 120,975 Inventories and supplies 6,096 10,868 Land, buildings and equipment - net 56,172 69,800 Goodwill - purchased 104,293 104,293 Deferred charges 2,514 2,069 Miscellaneous assets 1,500 1,000 Total Assets $472,320 $543,791 Liabilities and Capital Current liabilities $ 48,969 $ 71,169 Notes payable-non-current 88,089 94,350 Prepaid subscriptions 7,379 7,583 Miscellaneous non-current liabilities 1,737 1,617 Reserve for liability under employee profit sharing agreements 118,500 112,000 Capital stock (200 shares) 2,000 2,000 Earned surplus 205,646 255,072 Total Liabilities and Capital $472,320 $543,791 (c) As of December 31, 1965 and June 30, 1966 Assets 12/31/65 6/30/66 Cash on hand and in banks $ 60,763 $ 35,194 Securities at cost 115,054 115,054 Notes and accounts receivable - net 218,510 211,740 Inventories and supplies 9,808 11,577 Land, buildings and equipment - net 69,226 126,818 Goodwill - purchased 104,293 104,293 Deferred charges 4,555 12,416 Miscellaneous assets 1,000 1,000 Total Assets $583,209 $618,092 Liabilities and Capital Current liabilities $ 70,089 $ 45,850 Notes payable-non-current 100,594 135,095 Prepaid subscriptions 8,103 8,914 Miscellaneous non-current liabilities 1,526 1,994 Reserve for liability under employee profit sharing agreements 155,500 149,000 Capital stock (200 shares) 2,000 2,000 Earned surplus 245,397 275,239 Total Liabilities and Capital $583,209 $618,092 *262 (5) Securities owned by Watsonville As of December 31, 1965 and June 30, 1966 Description Cost $50,000 U.S. Treasury bonds - 2 1/2% of 6/15/69 $ 47,412 30,000 U.S. Treasury bonds - 4% of 8/15/70 30,000 10,000 U.S. Treasury bonds - 3 7/8% of 5/15/68 10,125 275 shares of 5% Series "A" cumulative preferred stock of E.W. Scripps Company 27,517 Total $115,054 Redding Record, Inc. Redding Record, Inc. (hereafter Redding) was incorporated under the laws of the State of California on October 17, 1938. From the date of incorporation until the date of decedent's death, the issued and outstanding capital stock of Redding was owned as follows: Class A, no-par shares Class B, no-par shares Total Decedent and her surviving husband, Roy D. Pinkerton, as community property — 10 — — 30 — — 40 — John P. Scripps — 80 — — 40 — — 120 — Paul C. Bodenhamer — 5 — — 15 — — 20 — Harry O. Bostwick, Jr. — 5 — — 15 — — 20 — Totals — 100 — — 100 — — 200 — As of June 26, 1966, Redding's principal business activity consisted of the publication of a daily newspaper, the Redding Record-Searchlight and The Courier-Free Press (hereafter the Record-Searchlight), in Redding, California. Redding*263 started the Record-Serachlight on October 17, 1938. The Record-Searchlight is circulated in Shasta County. As of June 26, 1966, the Record-Searchlight was printed on a forty year old five unit letter press and production was carried on in two separate locations, one of which was owned by Redding and the other leased. The estimated cost of consolidating operations and converting to an offset press was $950,000. As of June 26, 1966, there were profit-sharing agreements in existence between Redding and certain of its key employees. On December 3, 1965, the executive committee of Redding increased the reserve account from $125,000 to $200,000 from its earned surplus to provide for its liability under the profit-sharing agreements. The following schedules reflect certain information relevant to our consideration of the value of decedent's interest in Redding: (1) Redding Record, Inc. Net Income Before Federal Income Taxes Federal Income Taxes Dividends Paid — 1956 — $ 95,545 $ 44,183 $ 18,000 — 1957 — 94,939 43,862 18,000 — 1958 — 98,571 45,707 18,000 — 1959 — 122,941 58,429 18,000 — 1960 — 136,391 65,424 18,000 — 1961 — 146,0 02 70,421 38,000 — 1962 — 148,292 71,551 48,000 — 1963 — 154,890 74,416 48,000 — 1964 — 230,570 106,124 60,000 — 1965 — 275,167 124,867 72,000 — 1966 — 267,672 117,126 72,000 *264 (2) Redding Record-Searchlight & The Courier-Free Press Total Revenues Net Operating Profit Average Paid Daily Circulation Total Pages Printed Total Advertising Inches — 1956 — $ 593,964 $ 95,512 12,507 5,118 473,380 — 1957 — 642,613 94,987 13,131 5,272 481,716 — 1958 — 688,7 47 99,138 13,866 5,220 459,071 — 1959 — 779,797 126,527 14,795 5,372 494,788 — 1960 — 885,663 138,325 15,423 5,656 529,477 — 1961 — 936,798 147,448 16,159 5,676 510,540 — 1962 — 1,004,486 149,677 16,861 5,938 537,182 — 1963 — 1,093,888 153,908 18,057 6,260 553,938 — 1964 — 1,279,578 232,385 19,238 7,008 630,766 — 1965 — 1,425,348 272,466 20,150 7,394 665,616 — 1966 — 1,513,649 259,739 21,160 7,796 687,239 (3) Redding Record, Inc. (a) For the Years 1961, 1962, and 1963 — 1961 — — 1962 — — 1963 — Circulation income $207,685 $ 214,833 $ 223,983 Advertising income 711,331 772,807 855,229 Miscellaneous income (shopping news, circulars, commercial printing, etc.) 17,782 16,846 14,676 Interest income — 837 — — 899 — 1,392 Gain on sale of capital assets -0227 2,322 Total Income $937,635 $1,005,612 $1,097,602 Operating expense* 789,350 854,809 939,980 Interest expense 2,283 2,511 2,732 Operating income before federal income taxes $146,002 $ 148,292 $ 154,890 Federal income taxes 70,421 71,551 74,416 Net profit after federal income taxes $ 75,581 $ 76,741 $ 80,474 *Includes depreciation expense in the amounts of $ 19,086 $ 20,220 $ 22,993 (b) For the Years 1964, 1965, and 1966 — 1964 — — 1965 — — 1966 — Circulation income $ 254,750 $ 284,159 $ 299,927 Advertising income 1,009,243 1,111,572 1,178,428 Miscellaneous income (shopping news, circulars, commercial printing, etc.) 15,585 29,617 35,294 Interest income 1,138 6,100 11,754 Total Income $1,280,716 $1,431,448 $1,525,403 Operating expense* 1,047,193 1,152,882 1,253,909 Interest expense 2,953 3,399 3,822 Operating income before federal income taxes $ 230,570 $ 275,167 $ 267,672 Federal income taxes** 106,124 124,867 117,126 Net profit after federal income taxes $ 124,446 $ 150,300 $ 150,546 *Includes depreciation expense in the amounts of $ 23,354 $ 23,993 $ 26,631 **After reduction for investment credits in the amounts of $ 2,161 $ 713 $ 4,856 *265 (4) Redding Record, Inc. (a) As of December 31, 1961 and 1962 Assets 12/31/61 12/31/62 Cash on hand and in banks $ 77,548 $101,248 Securities at cost 29,578 29,578 Notes and accounts receivable - net 76,394 84,990 Inventories and supplies 40,569 36,226 Land, buildings and equipment - net 281,910 291,614 Goodwill - purchased 13,219 13,219 Deferred charges 3,671 4,217 Miscellaneous assets 11,155 5,115 Total Assets $534,044 $566,207 Liabilities and Capital Current liabilities $ 85,875 $ 85,010 Notes payable-non-current 41,854 45,540 Prepaid subscriptions 4,404 4,581 Miscellaneous non-current liabilities 6,658 7,081 Reserve for liability under employee profit sharing agreements 125,000 125,000 Capital stock (200 shares) 2,000 2,000 Earned surplus 268,253 296,995 Total Liabilities and Capital $534,044 $566,207 (b) As of December 31, 1963 and 1964 Assets 12/31/63 12/31/64 Cash on hand and in banks $ 96,379 $172,238 Securities at cost 38,003 38,003 Notes and accounts receivable - net 96,173 112,560 Inventories and supplies 29,693 16,855 Land, buildings and equipment - net 331,586 339,476 Goodwill - purchased 13,219 13,219 Deferred charges 5,315 5,568 Miscellaneous assets 3,252 3,252 Total Assets $613,620 $701,171 Liabilities and Capital Current liabilities $ 95,251 $109,219 Notes payable-non-current 49,215 56,650 Prepaid subscriptions 4,731 5,723 Miscellaneous non-current liabilities 7,954 8,665 Reserve for liability under employee profit sharing agreements 125,000 125,000 Capital stock (200 shares) 2,000 2,000 Earned surplus 329,469 393,914 Total Liabilities and Capital $613,620 $701,171 (c) As of December 31, 1965 and June 30, 1966 Assets 12/31/65 6/30/66 Cash on hand and in banks $110,945 $ 60,300 Securities at cost 38,003 38,003 Notes and accounts receivable - net 276,950 293,172 Inventories and supplies 21,590 21,272 Land, buildings and equipment - net 325,602 328,808 New press - installation in process -063,691 Goodwill - purchased 13,219 13,219 Deferred charges 9,257 15,554 Miscellaneous assets 19,761 — 100 — Total Assets $815,327 $834,119 Liabilities and Capital Current liabilities $137,479 $ 95,813 Notes payable-non-current 63,700 63,700 Prepaid subscriptions 5,836 6,626 Miscellaneous non-current liabilities 9,098 9,030 Reserve for liability under employee profit sharing agreements 200,000 200,000 Capital stock (200 shares 2,000 2,000 Earned surplus 397,214 456,950 Total Liabilities and Capital $815,327 $834,119 *266 (5) Securities owned by Redding Record, Inc. as of December 31, 1965 and June 30, 1966 Description Cost $10,000 U.S. Treasury bonds - 3 1/8% of 5/15/68 $ 10,000 30,000 U.S. Treasury bonds - 2 1/2% of 6/15/69 28,003 Total $ 38,003 ULTIMATE FINDINGS OF FACT As of June 26, 1966, the values per share of the stock owned by decedent and her husband were as follows: Scripps $5,400 Tulare — 400 — Watsonville 2,200 Redding 4,500 OPINION VALUATION We must first determine the value as of June 26, 1966, of shares of stock owned by decedent and her husband as community property at decedent's death. Petitioner reported certain values on the decedent's estate tax return, and the Commissioner determined a deficiency of $92,166.95 based on higher values. The Commissioner lowered that deficiency to $52,215.67, based on values computed by his expert witness. In an amended petition, petitioner modified his position in accordance with the values computed by his expert witness. The following chart summarizes these various values: Return Amended Petition Original Deficiency Modified Deficiency Scripps (per share) $4,800 $4,394 $13,779 $9,500 Tulare (per share) — 750 — — 169 — 1,245 — 900 — Watsonville (per share) 1,750 1,714 4,337 3,500 Redding (per share) 3,600 3,519 10,822 8,000 *267 Petitioner and the Commissioner presented the reports and testimony of two expert witnesses, both of whom were highly qualified to give expert opinions.Each expert used sophisticated analyses to determine the value of the shares under consideration. Petitioner's expert reviewed the financial data and the publishing facilities of each corporation and the market climate at the time of decedent's death. He examined valuation criteria and formulae proposed by various students of the newspaper industry. Of these formulae, he chose four which he believed representative and developed "Values of Total Enterprise by Principal Formulas" as follows: Krehbiel* 10 times 5-year mean net income 6-2/3 times excess of 5-year mean net income over 8% of net tangible assets, plus net tangible assets 13.1 times 1965 net income Scripps $1,772,279 $1,532,270 $1,197,865 $2,005,714 Per Share 11,076 9,577 7,486 12,535 Tulare 321,702 135,080 121,390 301,876 Per Share 1,608 — 675 — — 607 — 1,509 Watsonville 581,235 496,180 397,699 901,608 Per Share 2,906 2,480 1,988 4,508 Redding 1,149,079 1,015,080 857,084 1,968,930 Per Share 5,745 5,075 4,285 9,845 *268 Having indicated the values resulting from the application of these formulae, petitioner's expert examined data taken from the 1966 Moody's Manual concerning the Boston Herald-Traveler, Inc., the Cincinnati Enquirer, Inc., Dow Jones & Co., New York Times Co., and Times-Mirror Co. He concluded: The one company whose business is confined to that of newspaper publishing only, and in one locality, is the Cincinnati Enquirer, and in our opinion offers the best single comparable with the companies under valuation. Applying the same ratios to the companies under valuation gives the following results: Company 5-year P/E(14) 1965 P/E (12-1/2) 110% of gross Div. Yield (5.5%) Mean Scripps $13,407 $11,962 $18,456 $8,727 $ 13,138 Tulare — 946 — 1,441 2,382 — 0 — 1,192 Watsonville 3,473 4,302 4,071 3,182 3,757 Redding 7,105 9,394 7,830 6,545 7,718 *269 Having computed values which would have been appropriate if the companies had been transferred as complete enterprises and if the stock in the companies had been traded actively, petitioner's expert argued that the value of decedent's minority interests in closely held corporations was subject to a discount for lack of marketability. Using purchases by two investment companies in 1967 and 1968 of restricted shares of stock in corporations which also issued comparable publicly traded stock, he concluded that an appropriate discount "would certainly exceed 50 percent, and in our opinion would rise to 75 percent." Petitioner's expert concludes with the following "Valuation Summary": A purchaser of the shares of the Companies under valuation would acquire a highly unmarketable interest in Companies in which he had practically no influence upon management, and in which his expectancy could only be the dividend return, the value of which would be capitalizable at an appropriate discounted rate. In the case of two of the Companies (Watsonville Newspapers, Inc. and Redding Record, Inc.) the expectancy of increased dividends was high.In the case of one (Tulare Newspapers, Inc.) no dividend*270 had been paid during the preceding decade; revenues and net income were gradually increasing, but the necessity of eventually modernizing the presses would tend to postpone that expectation. In the case of John P. Scripps Newspapers the dividend was doubled in 1960, but had remained unchanged since, and the fluctuations in net income in the 5-year period, 1961-1965 (between $115,710 and $175,642), with the highest net in the earliest year, did not offer a basis for anticipating an early increase in the dividend. In the light of all the foregoing considerations it is our opinion that the shares of the instant Companies, on valuation date, if available and publicly marketable, would be appraised at the market at the mean of 10 times the five-year mean net profit and a capitalization of the dividend. In the case of the John P. Scripps Newspapers, the dividends, which have been secure and steady, would be capitalizable at 6 per cent, corresponding to the interest obtainable from time deposits in savings institutions. In the case of the Watsonville Newspapers, Inc. and Redding Record, Inc., an appropriate capitalization rate would be 4 per cent. In the case of Tulare Newspapers, Inc.*271 , which paid no dividends, the dividend capitalization rate would be zero. The results may be summarized as follows: 5-year P/E (19) Dividend capitalized Mean Scripps $9,576 $8,000 (6%) $8,788 Tulare — 675 — — 0 — — 338 — Watsonville 2,481 4,375 (4%) 3,428 Redding 5,075 9,000 (4%) 7,037 These values, in our opinion, would be subject to a discount for nonmarketability of at least 50 percent, or more, and at 50 percent discount the indicated fair market values are as follows: Scripps $4,394 Tulare — 169 — Watsonville 1,714 Redding 3,519 The Commissioner's expert analysed the newspapers and balance sheets of each company. Using that analysis, he compared the stock owned by decedent to the stock of seven companies "primarily engaged in the newspaper industry": Boston Hearld-Traveler, Cincinnati Enquirer, Federated Publications, Globe-News Publishing Company, Maclean-Hunter Publications (Canadian), Stauffer Publications, and Toronto Star Limited (Canadian). Having determined relevant averages for those seven companies, he chose four of them as more nearly comparable to the companies the stock of which he was evaluating: Cincinnati*272 Enquirer, Federated Publications, Maclean-Hunter Publications, and Stauffer Publications. Having determined average relevant ratios of those four companies, the Commissioner's expert examined the relevant ratios of the Cincinnati Enquirer, which he considered most similar to the companies the stock of which he was evaluating. We have compiled the following chart summarizing the values determined by the Commissioner's expert: Scripps Tulare Watsonville Redding Price-Net Tamgible Asset Ratio Of 7 na (335%) $ 9,075 $1,431 d Of 4 b $ 3,367- $ 8,6776,086 h 12,605 j Cincinnati Enquirer (448.70% 12,155 2,140 3,303 6,8974,580 i 10,002 k Price-Earnings Ratio Latest Year Of 7 na (16.48%) 1,2371,596 e Of 4 b (14.45%) 10,5451,23720,168 c 1,857 f h j Cincinnati Enquirer (12.73%) 10,808 1,197 i k 5 Year Average Of 7 a (22.04%) e Of 4 b (21.58%) c f h j Cincinnati Enquirer (16.24%) 12,635 1,283 i k Dividend Yield Latest Year Of 7 a (2.73%) e Of 4 b (3.04%) c f h j Cincinnati Enquirer (5.22%) 9,195 720 g i k 5 Year Average Of 7 a (2.11%) e Of 4 b (2.38%) c f h j Cincinnati Enquirer (4.33%) 11,085 730 g i k Value determined by Commissioner's expert 9,500 — 900 — 3,500 8,000 *273 *274 The reports and testimony of the two expert witnesses have aided us in our consideration of the evidence. Both reports were carefully prepared and suggested analyses which we have used in our independent determination of the value of the stock owned by decedent and her husband. Both experts have given us insights into the financial history and future of each of the companies. The use by the Commissioner's expert of comparative companies to develop ratios and formulae was helpful, but we have considered the sizes and capital structures of those "comparatives" in our own determination. Similarly, we have considered the review by petitioner's expert of literature containing formulae for the valuation of newspapers. We have also studied his lists of stocks purchased at discounts in our consideration of appropriate discounts. Cases of this kind would be better disposed of by the honest bargaining of the experts rather than by lengthy trials and conflicting testimony of those experts. Nevertheless, the parties in this case have come to us and have attempted to give us the knowledge of their experts. That the question of value is one of fact, to be decided after a consideration*275 of all the pertinent evidence and an application thereto of the judgment and experience of the trier of the facts, needs the citation of no authority. We have carefully considered all the evidence which the parties have offered and have attempted to follow in our own poor way the "ancient precedent established by a man whose name has become synonymous with wisdom." Webster Investors, Inc. v. Commissioner, 291 F.2d 192, 194 (C.A. 2, 1961), affirming a Memorandum Opinion of this Court. We state our application of that precedent to the pertinent facts without dissecting the individual factors underlying our findings, and we hold that the values per share of decedent's stock on June 26, 1966, were as follows: Scripps $5,400 Tulare — 400 — Watsonville 2,200 Redding 4,500 Funeral Expenses The second issue presented involves the deductibility of decedent's funeral expenses. The Commissioner determined that, under California law, the entire community property, including the interest therein of decedent's husband, was chargeable with decedent's funeral expenses and that, under section 2053(a), that portion of the funeral expenses chargeable to the husband's*276 one-half interest in the community property could not be deducted from decedent's gross estate. The Commissioner relies on Pfeiffer v. United States, 310 F. Supp 392 (E.D. Cal. 1969), Estate of Mary V. Rowan, 54 T.C. 633, 641 (1970), Estate of Hugh C. Hutson 49 T.C. 495 (1968), and Rev. Rul. 70-156, 1970-1 C.B. 190. See also Estate of Henry James Davis, 51 T.C. 361, 369 (1968). 2 Petitioner argues that the amounts paid for funeral expenses may be fully deducted from decedent's gross estate. He contends that a husband's funeral expenses are chargeable to community property only because that property is included in his gross estate and that, when a wife predeceases her husband, only her half of the community property is subject to the debts of her estate, including her funeral expenses. Petitioner relies on section 202 of the California Probate Code, In Re Cornitius' Estate, 154 Cal. app. 2d 422, 316 P.2d 438 (1957),*277 In Re Dennis' Estate, 110 Cal. app. 2d 667, 243 P.2d 579 (1952), and In Re Kurt's Estate, 83 Cal. app. 2d 681, 189 P.2d 528 (1948). Petitioner asks us to reconsider our holding in Estate of Mary V. Rowan, supra, that a wife's funeral expenses were not fully deductible. He argues that, in that case, we considered section 951.1 of the California Probate Code and did not consider the relevance of California Probate Code section 202, which, petitioner contends, establishes a distinction between the funeral expenses of a husband and those of a wife. We believe that our holding in Estate of Mary V. Rowan was correct. We need not analyze the complexities of the California statutes to determine whether the same sections establish the chargeability against the interests of both the husband and wife, for we find ample authority for the proposition that, in California, a husband's interest in community property must bear a portion of a wife's funeral expenses. In Odone v. Marzocchi, 34 Cal. 2d 431, 211 P.2d 297, 301-2 (1949), rehearing denied 212 P.2d 233 (1949), the Supreme Court of California held*278 that funeral expenses of a wife were chargeable against community property: Section 202 of the Probate Code provides in part that "Community property passing from the control of the husband, either by reason of his death or by virtue of testamentary disposition by the wife, is subject to his debts and to administration and disposal under the provisions of Division III of this code; * * *." The husband is liable for the necessaries of life furnished to the wife while the parties are living together. Civ. Code, sec. 174. [Now Civil Code 5130, added by Stats. 1969, c. 1608, p. 3343, sec. 8, operative January 1, 1970.] Medical expenses incurred during the last illness, and the funeral expenses, are such necessaries. * * * In Re Estate of Coffee, 19 Cal. 2d 248, 252, 120 P.2d 661, 664, this Court, in construing section 202, Probate Code, said that "* * * the portion of the community property which belongs to the wife is the one-half which remains after the payment of the husband's debts and the expenses of administration * * *." * * * In the Coffee case, the husband predeceased the wife so the reverse situation is presented. This would, however, seem to make no difference*279 in the result to be reached. This liability for a wife's funeral expenses does not seem to have been affected by either In Re Dennis' Estate, supra or the passage of section 951.1 of the California Probate Code. See Knego v. Grover, 208 Cal. App. 2d 134, 25 Cal Reporter 158, 165 (1962) and "Deductibility of Funeral Expenses - Time for a Change in California," August 1969 L.A.B. Bull. 426. Since California courts have held that community property is chargeable for the funeral expenses of a wife as well as a husband, we follow Pfeiffer v. United States, supra, and Estate of Hugh C. Hutson, supra, and hold that a portion of decedent's funeral expenses is not deductible from decedent's gross estate. In short, on this issue, we agree with the Commissioner's determination. Decision will be entered under Rule 155. Footnotes *. Pursuant to a notice of reassignment sent to counsel for all parties, and to which no objections were filed, this case was reassigned by the Chief Judge on July 5, 1973 from Judge Austin Hoyt to Judge Norman O. Tietjens↩ for disposition. 1. In June 1970, the Commissioner secured an appraisal which suggested values lower than those originally determined for the shares of stock the values of which are in dispute. Accordingly, the Commissioner has made certain concessions and now asserts a deficiency of $52,215.67. ↩ *. Converted from twice weekly to three times weekly, April 1, 1963. ** Converted from three times weekly to daily and Sunday, June 1,1964. ↩ *. Mean of (a) gross income x 117% (use 120%); (b) population x $19.34 (use $20); (c) paid circulation x $39.30 (use $40); (d) after tax earnings x 12. The Krehbiel formula values dailies at the price computed after certain adjustments to that mean for strengths and weaknesses of the town, field, plant, economy, and general operation of the paper. ↩ d. Apparently, the Commissioner's expert used an asset ratio of 300% rather than 355%. ↩ b. The four companies are Cincinnati Enquirer, Federated Publications, Maclean-Hunter Publications, and Stauffer Publications. ↩ h. The Commissioner's expert states that, based on average yields, asset ratio, and P/E ratios of the four comparatives, "indicated value of Watsonville stock ranges from $3,367 per share to $6,086 per share. The low side of the range is attributed to the price net tangible asset ratio and the high side is attributable to five year average earnings and dividends." ↩ j. The Commissioner's expert gives only a range, $8,677 to $12,605, of Redding values derived from the four comparables. ↩ i. The Commissioner's expert gives only a range, $3,303 to $4,580, of Watsonville values derived from Cincinnati. ↩ k. The Commissioner's expert gives only a range, $8,677 to $12,605, of Redding values derived from Cincinnati. ↩ e. The Commissioner's expert gives only a range, $1,237 to $1,596, of values of Tulare stock derived from average P/E ratios and yields of the seven comparatives. ↩ c. In his report, having set forth the P/E ratios and yields, the Commissioner's expert states, "The average ratios of the four comparatives produce indicated values for Scripps ranging from $10,545 per share to $20,168 per share." We assume that those figures represent utilization of the yields as well as the P/E ratios. ↩ f. The Commissioner's expert gives only a range, $1,237 to $1,857, of values of Tulare stock derived from P/E ratios and yields of the four comparatives. ↩ a. The seven companies are Boston Herald-Traveler, Cincinnati Enquirer, Federated Publications, Globe-News Publishing Company, Maclean-Hunter Publications, Stauffer Publications, and Toranto Star Limited. ↩ g. In his computations of the value of Tulare stock, the Commissioner's expert "assumed a dividend potential equivalent to a 40 percent pay out of earnings, this amounts to a dividend of $37.60 per share for 1966 and a five year average dividend of $31.60 per share." ↩ 2. The Comissioner notes that amounts paid after June 17, 1970, the effective date of an amendment to California Probate Code section 951.1 are fully deductible. See Rev. Rul. 71-168, 1971-1 C.B. 271↩.