Opinion ID: 2265400
Heading Depth: 1
Heading Rank: 2

Heading: the valuation of the podiatric practice

Text: After considering the testimony of the expert witnesses, the general master arrived at a value of the podiatric practice in the sum of $504,000. This valuation was made on the basis of the testimony of an expert witness, Alan Gilstein, C.P.A., who capitalized future earnings from the practice and concluded pursuant to Internal Revenue Service ruling 59-60 that the total value of the practice was $840,000. He reduced this figure by 20 percent for lack of marketability to the sum of $672,000 as the fair market value of the practice. The general master in his finding adopted a 40-percent factor for lack of marketability that had been determined by one of the husband's experts, Eugene Amelio, esquire. The master rejected the testimony of another expert presented by the husband, Anthony Melia, C.P.A. Using the 40-percent discount for lack of marketability, the general master arrived at the figure of $504,000. The court is divided on the propriety of this award. Two justices are of the opinion that it is improper as a matter of law to capitalize the earnings of a professional practice on the basis of the services of a single individual in order to arrive at a good-will factor in ascertaining the value of such practice. See, e.g., Powell v. Powell, 231 Kan. 456, 648 P.2d 218 (1982); Hanson v. Hanson, 738 S.W.2d 429 (Mo. 1987); Nail v. Nail, 486 S.W.2d 761 (Tex. 1972); Sorensen v. Sorensen, 839 P.2d 774 (Utah 1992); Holbrook v. Holbrook, 103 Wis.2d 327, 309 N.W.2d 343 (1981). Two justices are of the opinion that this issue has not been preserved on appeal by reason of the fact that the husband's experts also purported to value the good will of this practice, utilizing the factor of capitalizing a portion of future excess earnings. Consequently, since the court is equally divided on this issue, the findings of the general master concerning this valuation are affirmed.