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Matter of Scognamillo

Appellate Division of the Supreme Court of New York, First Department
Jan 24, 1991
169 A.D.2d 575 (N.Y. App. Div. 1991)

Opinion

January 24, 1991

Appeal from the Supreme Court, New York County (Edward H. Lehner, J.).


The major differences in the opinions offered by the expert witnesses with regard to valuation of the restaurant corporation had to do with computing "free and clear earnings", a key component in the "capitalization of income" method utilized. The gross disparity was due in large measure to two factors: (1) an overinflated adjustment by petitioners' expert to compensate for historic underreporting of income; and (2) the substitution of the much higher market-based rent for actual rent paid by the tenant restaurant corporation to its interlocking landlord corporation, even though actual rent had been utilized in evaluating the latter. We approve the IAS court's rejection of those adjustments in reaching its gross evaluation of the restaurant corporation.

There is no authority for the income deductions, especially in light of the facts that appellant concededly did nothing illegal, that each disbursement was made while appellant was still an officer of the respective corporation, and that each such disbursement was either approved or subsequently ratified by the respective board of directors. Settle order on notice.

Concur — Carro, J.P., Ellerin, Kupferman, Kassal and Rubin, JJ.


Summaries of

Matter of Scognamillo

Appellate Division of the Supreme Court of New York, First Department
Jan 24, 1991
169 A.D.2d 575 (N.Y. App. Div. 1991)
Case details for

Matter of Scognamillo

Case Details

Full title:In the Matter of SALVATORE SCOGNAMILLO, Appellant. PATSY'S ITALIAN…

Court:Appellate Division of the Supreme Court of New York, First Department

Date published: Jan 24, 1991

Citations

169 A.D.2d 575 (N.Y. App. Div. 1991)
564 N.Y.S.2d 429

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