What's the future role of the guideline public company method in US Tax Court?


"Some people think that REvenue Ruling 59-60 is biased toward the market approach," says Judge David Laro.   "But I happen to prefer the discounted cashflow methods.  The reason:  you can find similarities between comparable companies, but opposing counsel can also always find differences between the same companies.  This makes me uncomfortable and I wouldn't bet the whole farm on it."

"Watch out for situations where there aren't enough comparables," warned Judge Mary Ann Cohen. For one thing, it may suggest that there aren't enough market participants.  Both she and Judge Jerry Jacobs feel that the adjustments required to apply guideline company market methods can easily be questioned, making the public company method less trustworthy--concurring with Judge Laro.

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