At the time of the death of the taxpayer, she was the sole shareholder of a holding company ("701") that, in turn, held a 50% interest in a Canadian subsidiary operating company ("890") and a 1/3 interest in an American operating company ("123"). In valuing the shares of 701 at the time of the taxpayer's death, Campbell, J. found that:
- the determination of the maintainable earnings of the operating companies should not be adjusted for the 10% interest rate charged on loans made by 701 to them;
- the risk-free rate component of the discount rate should be the yield on ten-year government bonds in the case of 890, and the yield on long-term U.S. bonds in the case of 123;
- there should be a size premium added on to the risk-free rate of 5%;
- there should be a further increase in the discount rate of 10% to reflect company-specific rate (along with an adjustment for growth rates);
- a 15% discount for lack of control should be applied to the block held in 123 and a discount of 10% for the block held in 890; and
- the fair market value of the shares of 701 should be adjusted to take into account capital gains that would be realized on a distribution by it of its assets net of refundable tax.