THE APPLICABILITY OF A MARKET APPROACH VALUATION ANALYSIS THAT EMPLOYS ONLY A SINGLE COMPARABLE: HECK V. COMMISSIONER.

In Estate of Heck v. Commissioner, the Tax Court refused to adopt the Service's application of the market approach as part of a closely held company's valuation where the expert relied on only one comparable company. Instead, the court relied exclusively on the discounted cash flows (DCF) method to arrive at the company's valuation and the resultant deficiency in a decedent-shareholder's estate tax return. The Heck court correctly relied on only the DCF method for calculating Korbel's valuation, but it should have been less dismissive of Spiro's single comparable market approach valuation.