Opinion ID: 1200224
Heading Depth: 2
Heading Rank: 2

Heading: Unreasonable and Unrealistic Results

Text: The Estate argues that even if the restricted beneficial interest exception does not encompass a non-marketability exception to valuation under the tables, valuation under the tables in this case is still inappropriate because the tables yield an unreasonable and unrealistic result. While annuities should generally be valued under the Section 7520 tables, the applicability of the annuity tables is not unassailable. Cook, 349 F.3d at 850. The tables must be used to value annuities unless it is shown that the result is so unrealistic and unreasonable that either some modification in the prescribed method should be made, or complete departure from the method should be taken, and a more reasonable and realistic means of determining value is available. Id. at 854. Further, [t]he party challenging applicability of the tables has the substantial burden of demonstrating that the tables produce an unreasonable result. Id. at 854-55. The district court held that use of the annuity tables did not create an unrealistic or unreasonable result even though the table valuation was substantially less than the Estate's purported free market valuation. Here, the Estate has alleged a $1,176,810 disparity (roughly fifty percent less than the value prescribed by the tables). [8] In Cook, valuation of the non-transferable lottery payments under the annuity tables exceeded the highest expert valuation by $2,504,661 (a twenty-nine percent disparity) and the lowest by $3,982,850 (a forty-seven percent disparity). Cook, 349 F.3d at 852 n. 2, 856. Yet, this Court refused to depart from the tables. Id. at 856-57. Adherence to the tables in the face of even greater disparities has occurred. E.g., Estate of Donovan v. United States, 2005 WL 958403, -5 (D.Mass. April 26, 2005) (unpublished) (finding sixty-six percent disparity was not unreasonable, citing Cook ). More importantly, the Estate relies solely on marketability restrictions to demonstrate a disparity between the alleged fair market value and the value under the tables. This basis for departure under the unrealistic and unreasonable standard  for purposes of valuing a private annuity  is foreclosed by Cook. 349 F.3d at 856 (The result produced by the valuation tables is not unreasonable because the factor accounting for the disparity between the expert and the table valuation, i.e., a marketability discount, is not properly applied to the lottery prize.). Cook refused to depart from the annuity tables despite a significant disparity between the result under the tables and the alleged market value. The refusal was because that disparity arose from the same non-marketability factor that explains the disparity before us today. We continue to follow Cook 's lead. The district court correctly determined that the results yielded by the tables were not unrealistic and unreasonable in this case. AFFIRMED.