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Home My WebLink About11-21-11 1505610140 REV-1500 EX ~°'-'°' OFFICIAL USE ONLY PA Department of Revenue Bureau of Individual Taxes Coun Code Year ty File Number PO BOX 280601 INHERITANCE TAX RETURN Harrisburg, PA 17128-0601 RESIDENT DECEDENT 2 1 1 1 0 7 1 3 ENTER DECEDENT INFORMATION BELOW Social Security Number Date of Death MMDDYYYY Date of Birth MMDDYYYY 2 0 4 1 4 4 4 5 5 0 6 0 5 2 0 1 1 0 6 0 4 1 9 2 6 Decedent's Last Name Suffix Decedent's First Name MI B U C H A N A N L E W i S B (If Applicable) Enter Surviving Spouse's Information Below Spouse's Last Name Suffix Spouse's First Name MI Spouse's Social Security Number THIS RETURN MUST BE FILED IN DUPLICATE WITH THE REGISTER OF WILLS FILL IN APPROPRIATE OVALS BELOW O 1. Original Return ~ 2. Supplemental Return ~ 3. Remainder Return (date of death prior to 12-13-82} 4. Limited Estate ~ 4a. Future Interest Compromise (date of ~ 5. Federal Estate Tax Return Required death after 12-12-82) Q 6. Decedent Died Testate ~ 7. Decedent Maintained a Living Trust 8. Total Number of Safe Deposit Boxes (Attach Copy of Will) (Attach Copy of Trust) 9. Litigation Proceeds Received ~ 10. Spousal Poverty Credit (date of death ~ 11. Election to tax under Sec. 9113(A) between 12-31-91 and 1-1-95) (Attach Sch. O) CORRESPONDENT -THIS SECTION MUST BE COMPLETED. ALL CORRESPONDENCE AND CONFIDENTIAL TAX INFORMATION SHOULD BE DIRECTED TO: Name Daytime Telephone Number C H R I S T A M A P L I N 7 1 7 ,5., 4 1 5 5 5 0 --- - -_ - - r REGISTE~2 OF WILLS USE ONLY i First line of address .. J A N L B R O W N & A S S O C _~ ~ ~~ Second line of address . .. 8 4 5 S I R T H O M A S C T S T E 1 2 !~ ~ ~ -; City or Post Office State ZIP Code ~_._.. _ DATE FILED H A R R I S B U R G P A 1 7 1 0 9 Correspondent's a-mail address: CHRISTAJLB@VERIZON.NET Under penalties of perjury, !declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and wmplete. Declaration of preparer other than the personal representative is based on all information of which preparer has any knowledge. SIGNATU^RE~ ERS N RESPON BLE F (LING R~~uRN DATE ~_~!9~~"/~~,~ !-~~c /f i~.,c~i~ 10 / 13 / 2 011 1609 CRESSMAN CIR MECHANICSBURG PA 17055 SI URE OF PR ER OTHER THAN R\EPRESENTATIVE DATE ~~Q .jIIY~ 10/13/2011 AD RESS 845 SIR THOMAS CT STE 12 HARRISBURG PA 17109 PLEASE USE ORIGINAL FORM ONLY Side 1 1505610140 1505610140 1505610240 REV-1500 EX Decedent's Social Security Number Decedent's Name: L E W I S B• B U C H A N A N 2 0 4 1 4 4 4 5 5 RECAPITULATION 1. Real Estate (Schedule A) ............. . .. . .................... .... .. 1. 3 5 0 0 0 0 • 0 0 2. Stocks and Bonds (Schedule B) ................................ .... 2. .. 1 1 ~ 1 8 6 . 6 9 3. Closely Held Corporation, Partnership or Sole-Proprietorship (Schedule C) ... .. 3. 1 2 0 6 8 3 . 0 0 4. Mortgages and Notes Receivable (Schedule D) .................... .... .. 4. 5. Cash, Bank Deposits and Miscellaneous Personal Property (Schedule E). .... .. 5. 1 3 5 9 4 . 3 4 6. Jointly Owned Property (Schedule F) ^ Separate Billing Requested . .... .. 6. 7. Inter-Vivos Transfers & Miscellaneous N n-Probate Property (Schedule G) ~ Separate Billing Requested . .... .. 7. 1 3 7 3 2 2. 4 3 8. Total Gross Assets (total Lines 1 through 7) ..................... .... .. 8. 7 3 8 Z 8 6 . 4 6 9. Funeral Expenses and Administrative Costs (Schedule H) ............ .... .. 9• 3 0 5 7 7 • 0 0 10. Debts of Decedent, Mortgage Liabilities, and Liens (Schedule I) ....... .... .. 10. 7 `~ a . 8 1 11. Total Deductions (total Lines 9 and 10) ......................... .... .. 11. 3 1 3 ~ 5 • 8 1 12. Net Value of Estate (Line 8 minus Line 11) ...................... .... .. 12. 7 0 ~ 4 1 0 . 6 5 13. Charitable and Governmental Bequests/Sec 9113 Trusts for which an election to tax has not been made (Schedule J) ................ .... .. 13. 14. Net Value Subject to Tax (Line 12 minus tine 13) ................ .... .. 14. 7 0 ~ 4 1 0 . 6 5 TAX CALCULATION -SEE INSTRUCTIONS FOR APPLICABLE RATES 15. Amount of Line 14 taxable at the spousal tax rate, or transfers under Sec. 9116 (a)(1.2) x.o _ 0. 0 0 15. O. D 0 16. Amount of Line 14 taxable at lineal rate X .045 7 0 7 4 1 0. 6 5 16. 3 1 8 3 3. 4 8 17. Amount of Line 14 taxable at sibling rate X .12 0 0 0 17. 0. 0 0 18. Amount of Line 14 taxable at collateral rate X .15 0 0 0 18. 0. 0 0 19. TAX DUE ......................................................19. 20. FILL IN THE OVAL IF YOU ARE REQUESTING A REFUND OF AN OVERPAYMENT 3 1 8 3 3. 4 8 Side 2 1505610240 1505610240 0 REV-1500 EX Page 3 File Number Decedent's Complete Address: 21 11 0713 LEWIS B. BUCHANAN _ _ STREET ADDRESS 2511 Gettysburg Road _ _ _ Lower Allen Townsh~ __ CITY STATE Camp Hill ; PA ZIP 17011 Tax Payments and Credits: ~ ~ Tax Due (Page 2, Line 19) 2. Credits(Payments A. Prior Payments 28,000.00 B. Discount 1,473.64 3. Interest 4. If Line 2 is greater than Line 1 + Line 3, enter the difference. This is the OVERPAYMENT. Fill in oval on Page 2, Line 20 to request a refund. 5. If Line 1 + Line 3 is greater than Line 2, enter the difference. This is the TAX DUE. (3) (4) 31,833.48 0.00 (5) 2,359.84 Make check payable to: REGISTER OF WILLS, AGENT PLEASE ANSWER THE FOLLOWING QUESTIONS BY PLACING AN "X" IN THE APPROPRIATE BLOCKS 1. Did decedent make a transfer and: Yes No a. retain the use or income of the property transferred : ...................................................................... ^ 0 b. retain the right to designate who shall use the property transferred or its income; ::::::::::::::::::::::::::::::: ^ ^X c. retain a reversionary interest; or ....................................................... ^ d. receive the promise for life of either payments, benefits or care? ...................................................... ^ 2. If death occurred after December 12,1982, did decedent transfer property within one year of death without receiving adequate consideration? ....................................................................................... ^ 3. Did decedent own an "intrust for" or payable-upon-death bank account or security at his or her death? ......... 0 ^ 4. Did decedent own an individual retirement account, annuity or other non-probate property, which contains a beneficiary designation? .................................................................................................. ~ ^ IF THE ANSWER TO ANY OF THE ABOVE QUESTIONS IS YES, YOU MUST COMPLETE SCHEDULE G AND FILE IT AS PART OF THE RETURN. For dates of death on or after July 1, 1994, and before Jan. 1, 1995, the tax rate imposed on the net value of transfers to or for the use of the surviving spouse 3 percent [72 P.S. §9116 (a) (1.1) (i)]. For dates of death on or after Jan. 1, 1995, the tax rate imposed on the net value of transfers to or for the use of the surviving spouse is 0 percent [72 P.S. §9116 (a) (1.1) (ii)]. The statute does not exempt a transfer to a surviving spouse from tax, and the statutory requirements for disclosure of assets and filing a tax return are still applicable even if the surviving spouse is the only beneficiary. For dates of death on or after July 1, 2000: • The tax rate imposed on the net value of transfers from a deceased child 21 years of age or younger at death to or for the use of a natural parent, an adoptive parent or a stepparent of the child is 0 percent [72 P.S. §9116(a)(1.2)]. • The tax rate imposed on the net value of transfers to or for the use of the decedent's lineal beneficiaries is 4.5 percent, except as noted in 72 P.S. §9116(1.2) [72 P.S. §9116(a)(1)j. • The tax rate imposed on the net value of transfers to or for the use of the decedent's siblings is 12 percent (72 P.S. §9116(a)(1.3)]. Asibling is defined, unde Section 9102, as an individual who has at least one parent in common with the decedent, whether by blood or adoption. (1) Total Credits (A + B) (2) 29,473.64 REV-1502 EX+ (01-10) Pennsylvania SCHEDULE A DEPARTMENT OF REVENUE REAL ESTATE INHERITANCE TAX RETURN RESIDENT DECEDENT ESTATE OF: FILE NUMBER: LEWIS B. BUCHANAN 21 11 0713 All real property owned solely or as a tenant in common must be reported at fair market value. Fair market value is defined as the price at which property would be exchanged between a willing buyer and a willing seller, neither being compelled to buy or sell, both having reasonable knowledge of the relevant facts. Real property that is jointly-owned with right of survivorship must be disclosed on Schedule F. Attach a copy of the settlement sheet if the property has been sold. ITEM Include a copy of the deed showing decedent's interest if owned as tenant in common. VALUE AT DATE NUMBER OF DEATH DESCRIPTION 1 2511 Gettysburg Road, Lower Allen Township, Cumberland County 350,000.00 Property ID 13230551116 Valuation based upon appraisal by Robert Jones & Associates TOTAL (Also enter on Line 1, Recapitulation.) I $ 350,000.00 If more space is needed, use additional sheets of paper of the same size. REV-1503 EX + (6-98) SCHEDULE B COMMONWEALTH OF PENNSYLVANIA STOCKS & BONDS INHERITANCE TAX RETURN RESIDENT DECEDENT ESTATE OF FILE NUMBER LEWIS B. BUCHANAN 21 11 0713 All property jointlyowned with right of survivorship must be disclosed on Schedule F. ITEM VALUE AT DATE NUMBER DESCRIPTION OF DEATH 1. Securities held in Fidelity Investment Account X54-772062: a Fidelity Latin America (FLATX); 211.316 shs @ $58.54/sh 12,370.44 b Fidelity Select Energy (FSENX); 752.168 shs @ $57,61lsh 43,332.40 c Fidelity Select Energy Service (FSESX); 638.903 shs @ $81.94/sh 52,351.71 d Fidelity Select Natural Gas (FSNGX); 263.63 shs @ $34.64/sh 9,132.14 TOTAL (Also enter on line 2, Recapitulation) ~ $ 117 (If more space is needed, insert additional sheets of the same size) REV-1504 EX + (6-98) SCHEDULE C CLOSELY-HELD CORPORATION, COMMONWEALTH OF PENNSYLVANIA PARTNERSHIP OR INHERITANCE TAX RETURN RESIDENT DECEDENT SOLE-PROPRIETORSHIP ESTATE 4F FILE NUMBER LEWIS B. BUCHANAN 21 11 0713 Schedule C-1 or C-2 (including all supporting information) must be attached for each closely-held corporation/partnership interest of the decedent, other than a sole-proprietorship. See instructions for the supporting information to be submitted for sole-proprietorships. ITEM VALUE AT DATE NUMBER DESCRIPTION OF DEATH 1. Buchanan & Buchanan Partnership 120,683.00 50% equity interest Valuation based upon analysis of David E Coffman, Business Valuations & Strategies PC TOTAL (Also enter on line 3, Recapitulation) I $ 120,683.00 (If more space is needed, insert additional sheets of the same size) REV-1506 EX + (9-00) COMMONWEALTH OF PENNSYLVANIA INHERITANCE TAX RETURN RESIDENT DECEDENT SCHEDULE C-2 PARTNERSHIP INFORMATION REPORT ESTATE OF FILE NUMBER LEWIS B. BUCHANAN 21 11 0713 1 2. 3. 4. 5. Name of Partnership Buchanan & Buchanan Date Business Commenced 4/30/1985 Address 2511 Gettysburg Road Business Reporting Year calendar City Camp Hill State PA Zip Code 17011 Federal Employer I.D. Number 23-2403781 Type of Business real estate ProductlService apartment rentals Decedent was a ® General ^ Limited partner. {f decedent was a limited partner, provide initial investment $ FARTHER NAME PERCENT OF INCOME PERCENT OF OWNERSHIP BALANCE OF CAPITAL ACCOUNT A. Lewis B Buchan n 5 0 11 27 .27 a. Michael Buchan n 50 0 6 92 . c. D. 6. Value of the decedent's interest $ 120.683.00 7 8 Was the Partnership indebted to the decedent? ................................ ^Yes ®No If yes, provide amount of indebtedness $ Was there life insurance payable to the partnership upon the death of the decedent? ....... , ^Yes ® No If yes, Cash Surrender Value $ Net proceeds payable $ nwnar of the nnlicv 9. Did the decedent sell or transfer an interest in this partnership within one year prior to death or within two years if the date of death was prior to 12-31-82? ^ Yes ®No If yes, ^ Transfer ^ Safe Percentage transferred/sold Transferee or Purchaser Consideration $ pate Attach a separate sheet for additional transfers andlor sales. 10. Was there a written partnership agreement in effect at the time of the decedent's death?........ ®Yes ^ No If yes, provide a copy of the agreement. 11. Was the decedent's partnership interest sold? .................................. ^Yes ® No If yes, provide a copy of the agreement of sa{e, etc. 12. Was the partnership dissolved or liquidated after the decedent's death? ................. ^Yes ® No If yes, provide a breakdown of distributions received by the estate, including dates and amounts received. 13. Was the decedent related to any of the partners? ................................ ®Yes ^ No If yes, explain Lewis B Buchanan (father) & Michael D Buchanan (son) 14. Did the partnership have an interest in other corporations or partnerships? ................. ^Yes ® No If yes, report the necessary information on a separate sheet, including a Schedule C-1 or C-2 for each interest. A. Detailed calculations used in the valuation of the decedent's partnership interest. B. Complete copies of financial statements or Federal Partnership Income Tax returns (Form 1065) for the year of death and 4 preceding years. C. If the partnership owned real estate, submit a list showing the complete addressles and estimated fair market valuels. If real estate appraisals have been secured, attach copies. D. Any other information relating to the valuation of the decedent's partnership interest. REV-1508 EX + (6-98) SCHEDULE E COMMONWEALTH OF PENNSYLVANIA CASH, BANK DEPOSITS, & MISC. IN R SIIDENTEDECEDENTRN PERSONAL PROPERTY ESTATE OF FILE NUMBER LEWIS B. BUCHANAN 21 11 0713 Include the proceeds of litigation and the date the proceeds were received by the estate. All property jointly-owned with right of survivorship must be disclosed on Schedule F. ITEM VALUE AT DATE NUMBER DESCRIPTION OF DEATH 1. Fidelity Investment Account X54-772062; cash balance 299.30 2 M&T Bank Checking 14609916 2,441.77 3 Highmark; premium refund 43.34 4 Lester W Erb Inc; Check 16367; 6/11 rent 1,000.00 5 The Patriot-News; subscriber refund 128.93 6 Peerless Insurance Company; returned premium 671.00 7 2010 PA Property TaxlRent Rebate 450.00 8 1999 Lincoln Town Car Signature Sedan 4 DR; VIN 1 LNHM82WXXY655622 6,000.00 Sale proceeds from R J Cackovic Inc 9 Household contents 2,560.00 TOTAL (Also enter on line 5, Recapitulation) I $ 13 59 (If more space is needed, insert additional sheets of the same size) REV-1510 EX+ (08-09) pennsylvania DEPARTMENT OF REVENUE INHERITANCE TAX RETURN RESIDENT DECEDENT SCHEDULE G INTER-VIVOS TRANSFERS AND MISC. NON-PROBATE PROPERTY ESTATE OF FILE NUMBER LEWIS B. BUCHANAN 21 11 0713 This schedule must be completed and filed if the answer to any of questions 1 through 4 on page three of the REV-1500 is yes. ITEM NUMBER DESCRIPTION OF PROPERTY INCLUDE THE NAME OF THE TRANSFEREE, THEIR RELATIONSHIP TO DECEDENT AND THE DATE OF TRANSFER.ATTACHACOPYOFTHEDEEDFORREALESTATE. DATE OF DEATH VALUE OF ASSET °!° OF DECD'S INTEREST EXCLUSION (IF APPLICABLE) TAXABLE VALUE 1. Scottrade Account 19135411 96,310.58 100.00 96,310.58 TOD to 3 children - Deborah B Matz, Michael D Buchanan and Melanie B Cohick 2 Scottrade Roth IRA Account 19135472 41,011.85 100.00 41,011.85 Beneficiaries are 3 children - Deborah B Matz, Michael D Buchanan and Melanie B Cohick TOTAL (Also enter on Line 7, Recapitulation) ~ $ 137,322.43 If more space is needed, use additional sheets of paper of the same size. REV-1511 EX+ (10-09) pennsylvania DEPARTMENT OF REVENUE INHERITANCE TAX RETURN RESIDENT DECEDENT SCHEDULE H FUNERAL EXPENSES AND ADMINISTRATIVE COSTS ESTATE OF FILE NUMBER LEWIS B. BUCHANAN 21 11 0713 Decedent's debts must be reported on Schedule I. ITEM NUMBER DESCRIPTION AMOUNT A. FUNERAL EXPENSES: 1. Musselman Funeral Home and Cremation Services, Inc. 5,065.50 2 Funeral luncheon 648.08 B. ADMINISTRATIVE COSTS: 1. Personal Representative Commissions: Name(s) of Personal Representative(s) Street Address City State ZIP Year(s) Commission Paid: 2, attorney Fees: Jan L Brown & Associates 20,000.00 3, Family Exemption: (If decedents address is not the same as claimants, attach explanation.) Claimant Street Address City State ZIP Relationship of Claimant to Decedent 4. Probate Fees: Cumberland County Register of Wills 596.50 5 Accountant Fees: William M Porter, CPA, Porter Business Development Group 1,000.00 6. Tax Retum Preparer Fees: ~. Cumberland Law Journal; legal advertising 75.00 8 The Sentinel; legal advertising 178.92 9 Business Valuations & Strategies PC; partnership valuation fee 1,500.00 10 Robert Jones & Associates; real estate appraisal required for partnership valuation 800.00 11 Robert Jones & Associates; real estate appraisal 2511 Gettysburg Rd 650.00 12 Cumberland County Recorder of Deeds; deed filing fee 63.00 TOTAL (Also enter on Line 9, Recapitulation) I $ 30, 577.00 If more space is needed, use additional sheets of paper of the same size. REV-1512 EX+ (12-08) Pennsylvania DEPARTMENT OF REVENUE INHERITANCE TAX RETURN RESIDENT DECEDENT SCHEDULEI DEBTS OF DECEDENT, MORTGAGE LIABILITIES, & LIENS ESTATE OF FILE NUMBER LEWIS B. BUCHANAN 21 11 0713 Report debts incurred by the decedent prior to death that remained unpaid at the date of death, including unreimbursed medical expenses. ITEM VALUE AT DATE NUMBER DESCRIPTION OF DEATH 1. M&T Bank Checking 14609916; predeath transactions (4j, posted postdeath 276.04 2 Holy Spirit Hospital 275.25 3 PA Department Of Revenue; 2007 PA-40; balance due g.8g 4 PAWC 34.24 5 PPL Electric Utilities 132.27 6 Quest Diagnostics 11.91 7 Susquehanna Internal Medicine 26.91 8 Verizon 32.30 TOTAL (Also enter on Line 10, Recapitulation) I $ If more space is needed, insert additional sheets of the same size. REV-1513 EX+(01-10) Pennsylvania SCHEDULE J DEPARTMENT OF REVENUE BENEFICIARIES INHERITANCE TAX RETURN RESIDENT DECEDENT ESTATE OF: FILE NUMBER: I_EWIS R [Bl1CHANAN ~~ 11 m~~ RELATIONSHIP TO DECEDENT AMOUNT OR SHARE NUMBER NAME AND ADDRESS OF PERSON(S) RECEIVING PROPERTY Do Not List Trustee(s) OF ESTATE I TAXABLE DISTRIBUTIONS [Include outright spousal distributions and transfers under Sec. 9116 (a) (1.2).] 1. Michael D Buchanan, son Lineal 1609 Cressman Cir, Mechanicsburg, PA 17055 Sch A, G & residue 2 Deborah B Matz, daughter Lineal 6124 Summit Pointe Dr, Harrisburg, PA 17111 Sch G & residue 3 Melanie B Cohick, daughter Lineal 12 Sheeley Ln, Boiling Springs, PA 17007 Sch G & residue ENTER DOLLAR AMOUNTS FOR DISTRIBUTIONS SHOWN ABOVE ON LINES 15 THROUGH 18 OF REV-1500 COVER S HEET, AS APPROPRIATE. II. NON-TAXABLE DISTRIBUTIONS: 1. A. SPOUSAL DISTRIBUTIONS UNDER SECTION 9113 FOR WHICH AN ELECTION TO TAX IS NOT TAKEN: B. CHARITABLE AND GOVERNMENTAL DISTRIBUTIONS: 1. n TOTAL OF PART II -ENTER TOTAL NON-TAXABLE DISTRIBUTIONS ON LINE 13 OF REV-1500 COVER SHEET. $ It more space is needed, use additional sheets of paper of the same size. LAST WILL AND TESTAMENT OF LEWIS B. BUCHANAN I, LEWIS B. BUCHANAN, now domiciled in Cumberland County, Pennsylvania, declare this to be my Last Will and Testament. I revoke all other wills and codicils that I may have previously made. Article I My just debts and expenses of my last illness, funeral, and administration of my estate shall be paid by my Executor from the principal of my residuary estate as soon as practicable after my death. Article II All inheritance, estate, and succession taxes (including interest and penalties thereon, but not including any generation skipping tax) payable by reason of my death (whether or not the assets generating those taxes pass under this Will} shall be equitably apportioned among those beneficiaries to whom any benefit from my estate accrues, in the proportion that the value of the property or interest received by a beneficiary bears to the total value of the property and interests received by all such beneficiaries. This provision is not a waiver of any right which my Executor has to claim reimbursement for any such taxes which become payable as the result of any property over which I have the power of appointment. n ; y o .. --- :~, ~~-_ ..~,,3 - . . ~~~ /'~ 1 ~. ' J ~ -_- .- ~_~~ _. ..'.7 .--. Article III I give, devise and bequeath in accordance with any memorandum which I have either handwritten or signed, located with my will or with my valuable papers and found within 30 days of the probate of my will. Gifts may only be to persons who survive me or to organizations which exist at my death, and if there is a conflict, the memorandum having the latest date shall govern. Article IV I give and devise my real property located at 2511 Gettysburg Road, Camp Hill, Cumberland County, Pennsylvania, with the exception of the contents, to my son, MICHAEL D. BUCHANAN, of Cumberland County, Pennsylvania, NOT per stirpes. Article V I give, devise and bequeath the contents of my house IN EQUAL SHARES to my children, MICHAEL D. BUCHANAN, DEBORAH B. MATZ, and MELANIE A. COHICK. Article VI I give, devise and bequeath the contents of the garage and outbuildings located at 2511 Gettysburg Road, Camp Hill, Pennsylvania, to my son, MICHAEL D. BUCHANAN, NOT per stirpes. Article VII All the rest, residue and remainder of my estate, of whatsoever nature and wheresoever situate, I give, devise and bequeath IN EQUAL SHARES to my children, MICHAEL D. BUCHANAN, of Cumberland County, Pennsylvania, DEBORAH B. MATZ, of Dauphin County, Pennsylvania, and MELANIE A. COHICK, of Cumberland County, Pennsylvania. -2- If any of my beneficiaries predecease me or fail to survive me by thirty (30) days, I give, devise and bequeath his or her share to his or her issue who survive me, per stirpes, or if he or she has no issue, the share(s) are to be added equally to the other shares. Article VIII I understand and direct that my life insurance, annuities, individual retirement accounts (IRAs), in trust for bank accounts and any other assets on which I may designate a beneficiary will pass to the beneficiaries that I have named and will not be controlled by the distribution provisions of this Will. I also understand and direct that any assets I own jointly with another with rights of survivorship or a presumed rights of survivorship (whether the joint ownership was created before or after this Will) will pass to the surviving joint owner and distribution of such assets will not be controlled by the provisions of this Will. Article IX I nominate, constitute, and appoint MICHAEL D. BUCHANAN as Executor of my Last Will and Testament. In the event of the renunciation, death, or inability to act, for any reason whatsoever of my Executor, I nominate, constitute and appoint DEBORAH B. MATZ as successor Executrix of my Last Will and Testament. I direct that my Executor or successor Executrix be permitted to serve without bond and in addition to those powers granted by law, I grant them power to distribute in cash or in kind in like or in unlike shares and to file any qualified disclaimer I could have filed if living. My Executor or successor Executrix shall receive reasonable compensation for services rendered to my estate. -3- Article X In addition to the powers conferred by law, I authorize my Executor and successor Executrix, in his/her absolute discretion: (a) to retain in the form received and to sell either at public or private sale, any real estate or personal property except that which I specifically bequeath herein, (b) to manage real estate, (c) to invest and reinvest in all forms of property without being confined to legal investments, and without regard to the principal of diversification, (d) to exercise any option or right arising from the ownership of investments, (e) to compromise claims without court approval and without consent of any beneficiary, (f) to file any federal income tax return for any year for which I have not filed such return prior to my death, (g) to make distributions in cash or in kind, or in both, and to determine the value of any such property, (h) to employ any attorney, investment advisor, or other agent deemed necessary by my Executor; and to pay from my estate reasonable compensation for all their services, (i) to conduct alone or with others, any business in which I am engaged in, or have an interest in at time of my death, (j) to file any qualified disclaimer I could have if living, and (k) to receive reasonable compensation in accordance with their standard schedule of fees in effect while their services are performed. -4- IN WITNESS WHEREOFn, I, LEWIS B. BUCHANAN, hereby set my hand to this my Last Will and Testament, on `l - ~ ~ 2010. _r EWIS B. BUCHANAN In our presence, the above-named LEWIS B. BUCHANAN signed this and declared this to be his Last Will and Testament and naw at his request, in his presence, and in the presence of each other, we sign as witnesses. Name ti ~~ -- ~ --~ Address 845 Sir Thomas Court Suite 12 Harrisburg PA 17109 845 Sir Thomas Court, Suite 12 Harrisburg PA 17109 -5- I, LEWIS B. BUCHANAN, Testator, who signed the foregoing instrument, having been duly qualified according to law, acknowledge that I signed and executed this instrument as my Will, and that I signed it willingly as my free and voluntary act for the purposes therein expressed. Sworn to or affirmed and acknowledged before me by LEWIS B. BUCHANAN, the Testator on ~-/5 ,2010. No ary P lic ~. ~~NOTARIAL SEAL JAC6IUELINE A KEILY Notary Public CIN OF HARRISBURG, DAUPHIN COUNTY My Commission Expires Dec 1 7, 2011 We, the undersigned witnesses who signed the foregoing instrument, being duly qualified according to law, depose and say that we were present and saw the Testator sign and execute this instrument as his Will; that he signed and executed it willingly as his free and voluntary act for the purposes therein expressed; that each of us in his sight and hearing signed the Will as witnesses, and that to the best of our knowledge, that he was at that time eighteen (18) years or more of age, of sound mind, and under no constraint or undue influence. Sworn to or affirmed and subscribed to before me and ~~: ~.c ~ ~( r~ ~ ~.~~ 1e , witnesses, on ~ - ~ 5 , 2010 tary ublic NOTARIAL SEAL JAC9UELINE A KELLY Notary Public CITY OF HARRISBURG, DAUPHIN COUNTY My Commission Expires Dec 1 7, 2011 ..e,.~,, -6- ~ ~ Witness ` ~~~~~~~~s~~ ess COPY IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ` ORPHANS' COURT DIVISION ~ _ `C7 --- -r-. ;_~ ~ ~ ;, ~:- -_ ~, ~ ESTATE OF LEWIS B. BUCHANAN, DECEASED L:1 m ~ ~-1 FILE N0.201I-00713 ~ n ~ ' " _ _ r; C ~ ~-~ ,., .. - :~~~)`~i i DISCLAIMER AND RENUNCIATION i C ": ? , ~ -- '_ ~: ~ D ~ C~ ~ C ^ T,, n_ I, DEBORAH B. MATZ, am a child of Lewis B. Buchanan and a beneficiary under his Will dated September 15, 2010. As such I hereby exercise the rights granted to me in Chapter 62 of the Probate, Estates and Fiduciaries Code, 20 Pa. C.S. 6201-6207. My father, Lewis B. Buchanan died on June 5, 2011. Pursuant to Article VII, his residuary estate passes in equal shares to his three children, Michael D. Buchanan, Deborah B. Matz and Melanie A. Cohick, per stirpes. A portion of his residuary estate is comprised of a fifty percent (50%) equity interest in Buchanan & Buchanan partnership (the "Partnership"). I hereby disclaim and renounce any interest I may have in Partnership in favor of Michael D. Buchanan. IN WITNESS WHEREOF, and intending to be legally bound hereby, and intending that this Disclaimer and Renunciation shall be filed of record in the Office of the Cierk of the Orphans' Court Division of the Court of Common Pleas of Cumberland County, Pennsylvania as provided in 20 Pa. C.S. 6204(a), I have hereunto set my hand and seal this~'hctay of October, 2011. WITNESS: ~~ `, v y DEBORAH B. MATZ Page 1 of 2 COMMONWEALTH OF PENNSYLVANIA SS: COUNTY OF DAUPHIN On this the ~ 3 ~ day of October, 2011 before me, a Notary Public, the undersigned officer, personally appeared DEBORAH B. MATZ, known to me or satisfactorily proven to be the person whose name is subscribed to the within instrument, and acknowledged that she executed the same for the purposes therein contained. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ~~~1~ Notary Public COMMONWEAIiN OF PENNSYLVANIA NOTARIAL tEAL Melissa L. Smith. Notary Publb Gettysburg Borough, AAsma COw~ My CommNNlon Expka~ ~ 1 S. 5014 Page 2 of 2 j~ COPY IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION n ~- ~ ~ . :~~ 7~ ~ ESTATE OF LEWIS B. BUCHANAN, DECEASED -~ -r_ c~ _ -_ FILE N0.2011-00713 ~_ ~~ ~'~ ~~ - "~;z~ ~.~ .:~' DISCLAIMER AND RENUNCIATION '`-' ~" - n' - `' ~ O ~ , -n I, MELANIE B. COHICK, am a child of Lewis B. Buchanan and a beneficiary under his Will dated September I5, 2010. As such I hereby exercise the rights granted to me in Chapter 62 of the Probate, Estates and Fiduciaries Code, 20 Pa. C.S. 6201-6207. My father, Lewis B. Buchanan died on June 5, 2011. Pursuant to Article VII, his residuary estate passes in equal shares to his three children, Michael D. Buchanan, Deborah B. Matz and Melanie A. Cohick, per stirpes. A portion of his residuary estate is comprised of a fifty percent (50%) equity interest in Buchanan & Buchanan partnership (the "Partnership") I hereby disclaim and renounce any interest I may have in Partnership in favor of Michael D. Buchanan. IN WITNESS WHEREOF, and intending to be legally bound hereby, and intending that this Disclaimer and Renunciation shall be filed of record in the Office of the Clerk of the Orphans' Court Division of the Court of Common Pleas of Cumberland County, Pennsylvania as provided in 20 Pa. C.S. 6204(a), I have hereunto set my hand and seal this /3~' day of October, 2011. WITNESS: MELANIE B. COHICK Page 1 of 2 COMMONWEALTH OF PENNSYLVANIA SS: COUNTY OF DAUPHIN On this the ~_ day of October, 2011 before me, a Notary Public, the undersigned officer, personally appeared MELANIE B. COHICK, known to me or satisfactorily proven to be the person whose name is subscribed to the within instrument, and acknowledged that she executed the same for the purposes therein contained. IN WITNESS WHEREOF, I hereunto set my hand and official seal. Notary Public COMMONWEALTH OF PENNiYWAN1A NO?ARIAL SEAL Melisss L. Smith, Notsry Publla Gettysburg Borough, Adsms County MY Commisslon ExpheslNlle 13, ZOt4 Page 2 of 2 ([~ COPY IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION Gc}~hP Y' , 2011. ESTATE OF LEWIS B. BUCHANAN, DECEASED FILE N0.2011-00713 DISCLAIMER AND RENUNCIATION n o __:: - .~ - ,,~ ~' ~ T _17 C!J J' %\ ,~J ~,-.. ~CJ r.,J ~ _'_'~ . . ,D I, RACHEL E. COHICK, am the only child of Melanie B. Cohick and as such I hereby exercise the rights granted to me in Chapter 62 of the Probate, Estates and Fiduciaries Code, 20 Pa. C.S. 6201-6207. My grandfather, Lewis B. Buchanan died on June 5, 2011. Pursuant to Article VII, his residuary estate passes in equal shares to his three children, Michael D. Buchanan, Deborah B. _~ ~ ~~ ~- , ~. .-,-, L~7 G -T, Matz and Melanie A. Cohick, per stirpes. A portion of his residuary estate is comprised of a fifty percent (50%) equity interest in Buchanan & Buchanan partnership (the "Partnership") 1 hereby disclaim and renounce any interest I may have in Partnership in favor of Michael D. Buchanan. IN WITNESS WHEREOF, and intending to be legally bound hereby, and intending that this Disclaimer and Renunciation shall be filed of record in the Office of the Clerk of the Orphans' Court Division of the Court of Common Pleas of Cumberland County, Pennsylvania as provided in 20 Pa. C.S. 6204(a), I have hereunto set my hand and seal this ~. ~ day of .; WITNES .;' .~ , ; ~ ~ RACHEL E. COHICK Page 1 of 2 COMMONWEALTH OF PENNSYLVANIA ~7 SS: COUNTY OF (~v~ 3 EfZ(,A~~ On this the ~ day of ~CT08E2 , 2011 before me, a Notary Public, the undersigned officer, personally appeared RACHEL E. COHICK, known to me or satisfactorily proven to be the person whose name is subscribed to the within instrument, and acknowledged that she executed the same for the purposes therein contained. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ary Public COMMONWEALTH OF PENNSYLVANIA NOTARIAL SEAL JASON WIRTH, Notary Public Camp Hill Born. Cumberland County My 6emmiiNon Explroi /lupus t0, Z01b Page 2 of 2 ATTACHMENT TO REV-1500 ESTATE OF LEWIS B BUCHANAN FILE NUMBER 21 11 0713 Pursuant to Chapter 62 of the Probate, Estates and Fiduciaries Code, 20 Pa. C.S. 6201- 6207, Deborah B. Matz, Melanie B. Cohick and Rachel E. Cohick disclaimed and renounced any interest each may have passing under the Last Will and Testament of Lewis B. Buchanan in Buchanan & Buchanan partnership in favor of Michael D. Buchanan. Said disclaimers were filed with the Cumberland County Register of Wills on November 8, 2011. Said disclaimers did not affect the calculation of Pennsylvania Inheritance Tax, because all beneficiaries are of the same class. APPRAISAL OF REAL PROPERTY LOCATED AT: 2511 Gettysburg Rd Estate of Lewis B Buchanan Camp Hill, PA 17011 FOR: Jan L Brown & Associates 845 Sir Thomas Court, Suite 12 Harrisburg, PA 17109 AS OF: oa~22no11 BY: Robert Jones, SRA, GAA Sale Price NtA Date of Sale N/A Descri lion and amount of loan char a concessions to be aid b seller NIA Lender Client Jan L Brown 8~ Associates Address 845 Sir Thomas Court Suite 12 Harrisbur PA 17109 A raiser Robert Jones SRA GAA Address 7800 Allentown Blvd. Harrisbur PA 17112 Location Urban Suburban Rural Built up ®Over 75% ®25-75% ^ Under 25% Growth rate ^ Rapid ®Stable ^ Slow Predominant occupancy ®Owner PRA 91e family h AGEg $ 000) (yrs) 100 Low 30 present land use % One family 97 2-4 family 0 Land use change ^ Not likely ^ Likely ®In rocess P Property values ^ Increasing ®Stable ^ Declining ^ Tenant 200 Hi h 65 Muld-famiy 0 To: residential to Demand/suppy ^ Shortage ®In balance ^ Over suppy ®vacant (0-5%) Predominant Commercial 3 Commercial Marketin time Under 3 mos. 3-6 mos. Over 6 mos. vac. over 5% 150 50 Vacant 48 Note: Race and the racial composition of the neighborhood are not appraisal factors. Neighborhood boundaries and characteristics: Market Street to the north Route 83 to the eas PA turn ike to the south and Wesle IRossmo ne Roads to the West. A nei hborhood of commercial and residential ro rties • :. Factors that affect the marketability of the properties in the neighborhood (proximity to employment and amenities, employment stability, appeal to market, etc.): Older established nei hborhood located in Lower Allen townshi .The area is in close roximi to desired amenities and access to em to ment. The area is in the area of man lar a commercial ro erties includin are Tonal sho in center. There are man small businesses on the same street as the sub'ect roe Market conditions in the subject neighborhood (including support for the above conclusions related to the trend of property values, demand/supply, and marketing 6me -- such as data on competitive properties for sale in the neighborhood, description of the prevalence of sales and financing concessions, etc.): I have examined all the sales in the boundaries and the com arables sales in the bounds in the ast 12 months and found that vices are stable this is due to the reasonabl riced level of the area. There is not an over su I current) on the market. Project Inforn-ation for PUDs (If applicable) - - Is the developer/builder in control of the Hame Owners' Association (HOA)? Yes No N/A _ Approximate total number of units in the subject project NIA Approximate total number of units far sale in the subject project N/A Describe common elements and recreational facilities: NIA Dimensions 100 x 991.62 deed attached 100 x 900 accordin to Mr. Buchanan Topography Level at street rade Site area 90,000 Sg. Ft. Corner Lot ^ Yes ®No Size Lar er than avers a for the area Specific zoning classification and description C-2 General Commercial Shape Rectan ular Zoning compliance ®Legal ^ Legal nonconforming (Grandfathered use) ^ Illegal ^ No zoning Drainage Avers e Hi hest & best use as im roved: Present use Other use ex lain Mixed Use View Commercial & Residential Utilities Public Other Electricity ® Off-site Improvements Type Public Private Street Asphalt ® ^ Landscaping Avera a for the area Driveway Surtace As halt Gas ®Pro ane Water ®Well Curb/gutter Concrete ® ^ Sidewalk None ^ ^ Apparent easements None Known FEMA Special Flood Hazard Area ^ Yes ®No Sanitary sewer ®On site Street lights None ^ ^ FEMA Zone X Map Date 3116/2009 Storm sewer Alle None FEMA Ma No. 42041C0281E Comments (apparent adverse easements, encroachments, special assessments, slide areas, illegal or legal nonconforming zoning use, etc.): The deed shows a de th of 991 feet. Mr. Buchanan told this a raiser that 100 feet was taken from the front to ex and the street. The lot is current) 900 feet dee . See additional comments on H i hest and Best Use. GENERAL DESCRIPTION EXTERIOR DESCRIPTION FOUNDATION BASEMENT INSULATION No. of Units 1 Foundation Concrete Slab None Area Sq. Ft. 944 Roof ^ No. of Stories 2.5 Sto Exterior Walls Brick Crawl Space None % Finished 0 Ceiling Concl Type (Det.lAtt.) Detached Roof Surface Shin les Basement 100% Ceiling file Walls Concl Design (Style) Ca Cod Gutters 8 Dwnspts. Aluminum Sump Pump None Walls anelin Floor FG Existing/Proposed Existin Window Type PartRe lace Dampness No Evidence Floor concrete None ^ Age (Yrs.) 81 Storrrl/Screens Screens Settlement No Evidence Outside Entry Yes Unknown ^ EFFective A e rs. 30 Manufactured House N/A Infestation No Evidence Concrete Floor ROOMS Fo er Livin Dinin Kitchen Den Famil Rm. Rec. Rm. Bedrooms # Baths Laund Ot her Area S . Ft. • Basement 1 1 1 1 g44 Level) 1 1 1 1 1 3 .5 944 Level2 4 1 840 • Finished area above rade contains: 7 Rooms 7 Bedroom s • 1 .5 Bath s ~ 1 784 S u are Feet of Gross Livin Area INTERIOR Materials/Corxlition HEATING KITCHEN EQUIP. ATTIC AMENITIES CAR STORAGE: 2 Floors HW,Cpt,CT /Good Type HW Bsbd Refrigerator ^ None ^ Fireplace(s) # 1 ® None ^ 1+ Walls Plaster / Avera a Trim/Finish Wood /Good Fuel Oil Condition Good Range/Oven ® Disposal ^ Stairs ® Drop Stair ^ Patio Rear 1^ Deck None ^ Garage # of cars Attached 1 Car Bath Floor Ceramic 1 Good COOLING Dishwasher ® Scuttle ® Porch Two ® Detached 2 car OS Bath Wainscot Ceramic I Good Central Yes FaNHood ® Floor ® Fence None ^ Built-In Doors Wood ! Avera a Other NIA Microwave ^ Heated ^ Pool None ^ Carport Condition Avera a Washer D er Finished Gazebo Drivewa As halt Additional features (special energy efficient it ems, etc.): Front orch and rear orc h Ve lar a deta ched ara a 30 x 40 which can be used for commercial u oses. Three sto b uildin which is cur rent) used as a w arehouse. SEE A DDITIONAL COMMENTS O N OUTBUILDINGS. Condition of the improvements. deoreriation fohvsiral funrtinnal and external) repairs needed nnality of cnncinictinn mmnrlolinn/arlrlitinne otr • Ttio cuhinrl - Total Estimated Cost New....._.,....._-_-_..-...,,_ $ . Less Physical Functional External Depreciation ( ( _$ Depreciated Value of Improvements ............................„-_, _$ "As-is"Value of Site Improvements__...-._-..--__-..-...,...._. _$ INDICATED VALUE BYCOSTAPPROACH ............................ -$ ITEM SUBJECT COMPARABLE N0.1 COMPARABLE N0.2 COMPARABLE N0.3 2511 Gettysburg Rd Address Cam Hill 3805 Market Street Cam Hill PA 17011 2008-2010 Market Street Cam Hill PA 17011 149 S. 32nd Street Cam Hill PA 17011 Propmi to Sub'ect 1.30 miles NW 0.92 miles NE 0.73 miles NW Safes Price NIA 220 000 325 000 180 000 Pric Gross Livin Area 167.56 ~ 112.07 ~ 102.86 ~ Data and/or Verification Source MLS 10182171 AssessmentRcrds Multi List t 10157711 Assessment Records Multi List 110187754 Assessment Records Multi List / 10188005 Assessment Records VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION + - $ Ad' st. DESCRIPTION + - $ Ad~ust DESCRIPTION ; + - S Ad'ust Sales or Fnancing Concessions Conv / 0 dom 0 None 0 Conv ! 9 dom 0 None 0 Conv ! 50 dom 0 None 0 Date of Sal ime 03-31-2008 0 03-15-2010 0 03-05-2010 0 Location Suburban Suburban 0 Suburban-Su er -75 000 Suburban p Leasehold ee Sim le Fee Sim le Fee Sim le 0 Fee Sim le 0 Fee Sim le 0 Site 90 000 S . Ft. .28 acre +g0 000 .O7 acre +100 000 .20 acre +93 500 View Commercial 8 Re: Commercial 0 Commercial 0 Commercial 0 Desi n and A eal Ca Cod Ca a Cod 0 Traditional 2 s 0 Traditional 2 s 0 (luali of Construction Brick Brick 8 Vin I +2 500 Vin I +5 000 Brick 8 Vin I +2 500 A e 81 -70 0 -140 0 -g6 0 Condition Avera a/Good Avera a +2 500 Avera a +2 500 Avera elGood 0 Above Grade Total ~ Bdrms~ Baths Total ~Bdrms ~ Baths ~ 0 Total ~Bdrms ~ Baths ~ 0 Total ~Bdrms ~ Baths ~ 0 Room Count 7 ~ 7 ~ 1.5 7 ~ 4 ~ 1.5 ~ 0 11 ~ 6 ~ .3 ~ 0 7 ~ 4 ~ 2 ~ +1 000 - Gross Livin Area 1 784 S . Ft. 1 313 S . Ft. ~ +g 420 2 900 S . Ft. ~ -22 320 . , 1 750 S . Ft. ~ +680 - - Basement & Fnished Rooms Below Grade 944 0 - 800 SIF 0 None 0 -1,400 S/F 0 None 0 - 800 S/F 0 None p Functional Utili Avera a Avera e 0 Avera e 0 Avera e p Heatin Coolin Hot Water / CA F.W.A. I CA 0 F.W.A. I CA 0 F.W.A. / CA 0 Ener Efficient items ThermoRe lace ThermoRe lace 0 ThermoRe lace 0 ThermoRe lace 0 - Gara Car ort 2 None +5 000 None +5 000 None +5 000 Porch, Patio, Deck, Fire laces etc. 2 Porch 1 None +2,000 None +2 000 None +2,000 None +2 000 None +2,000 None +2 000 Fence Pool etc. Warehouse None +2 500 None +2 500 None +2 500 Other Gazebo None +1500 None +1500 None +1500 Net Ad'. total + - 117 420 + - 23180 + - 110 680 ~ Adjusted Sales Price None None None of Com arable 337 420 348180 290 680 Comments on Sales Comparison (including the subject property's compatibility to the neighborhood, etc.): Five com arable sales have been rovided all are Located in ITEM SUBJECT COMPARABLE N0.1 COMPARABLE N0,2 COMPARABLE N0.3 Date, Price and Data Source, for prior sales within ear of a raisal None in the last 3E NIA Assessment Reco None in the past 12 months NIA Assessment Records None in the past 12 months NIA Assessment Records None in the past 12 months NIA Assessment Records Analysis of any current agreement of sale, option, or listing of subject property and analysis of any prior sales of subject and comparables within one year of the date of appraisal: All information on transfers is included above. INDICATED VALUE BY SALES COMPARISON APPROACH ....... ... . . . ..... . ... - ~ ~--- --~ - - -- --... $ 350000 INDICATED VALUE BY INCOME APPROACH if A licable Estimated Market Rent $ NIA /Mo. x Gross Rent Multi lier NIA = $ This appraisal is made "as is" subject to the repairs, alterations, inspections or conditions listed below subject to completion per plans & specifications. Conditions of Appraisal: The a raisal is com leted in the "AS tS" condition. Final Reconciliation: The Saes Com orison A roach to value is considered to be the most accurate method of achievin an estimated market value due to the availabili of com arables. The Cost A roach is not a licable in an exterior a raisal and the difficulties associated with - determinin de reciation. The lack of data to develo a month rent multi {ier forced the elimination of the Income A roach. The purpose of this appraisal is to estimate the market value of the real property that is the subject of this report, based on the above conditions and the certification, contingent and limiting conditions, and market value definition that are stated in the attached Freddie Mac Form 439/FNMA form 10046 (Revised 06!93 ). 1(WE) ESTIMATE THE MARKET VALUE, AS DEFINED, OF THE REAL PROPERTY THAT IS THE SUBJECT OF THIS REPORT, AS OF 08/22/2011 (WHICH IS THE DATE OF INSPECTION AND THE EFFECTIVE DATE OF THIS REPORT/ TO BE Q 350-000 avora a an, e su lec grope y, a p us + a lus men is ma e, us increasing t e in icated value of the su ject. ITEM SUBJECT COMPARABLE NO. 4 COMPARABLE N0. 5 COMPARABLE N0. 6 2511 Gettysburg Rd Address Cam Hill 1518 Carlisle Road Cam Hill PA 17011 5231 E. Trindle Road Mechanicsbur PA 17050 Proximi to Sub ect 1.31 miles E 1.56 miles W Sales Price N!A 175 000 200 000 Pric Gross L'win Area ~ 100.52 ~ 117.65 ~ ~ Data and/or Verification Sources MLS 10182171 AssessmentRcrds Multi List ! 10171724 Assessment Records Multi List 110188201 Assessment Records VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION + - $ Ad'ust DESCRIPTION + - $ Ad' sE DESCRIPTION + - Ad'ust. Sales or financing Concessions Conv / 206 dom 0 No Costs Paid 0 Conv 1343 dom 0 None 0 Date of Sal ime OEi-30-2009 0 12-27-2010 0 Location Suburban Suburban-Inferior ; +50 000 Suburban-Inferior ; +75 000 Leasehold ee Sim le Fee Sim le Fee Sim le 0 Fee Sim le 0 Site 90 000 S . Ft. .15 acre +g6 000 .79 acre +Ei4 000 View Commercial 8 Re: Comm /Houses 0 Commercial 0 _ Desi n and A eal Ca a Cod Traditional 2 s 0 Ca a Cod 0 lluali of Construction Brick Brick 0 Brick 0 A e 81 59 0 - 50 0 Condition Avera a/Good Avera elGood 0 Avera a +2 500 Above Grade Total ~Bdrms~ Baths Total ~Bdrms~ Baths ~ 0 Total ~Bdrms~ Baths ~ 0 Total ~Bdrms~ Baths Room Count 7 7 1.5 7 3 1 +2,500 7 4 1.5 0 Grass Livin Area 1 784 S . Ft. 1 741 S . Ft. ~ +860 1 700 S . Ft. ~ +1 680 S . Ft. Basement & Finished Rooms Below Grade 944 0 -800 0 None 0 - 800 S/F 0 None 0 Functional Utili Avera a Avera e 0 Avera e 0 Heatin Coolin Hot Water / CA F.W.A. / CA 0 F.W.A. I CA 0 Ener Efficient ttems ThermoRe lace ThermoRe lace 0 ThermoRe lace 0 Gara Car ort 2 1 Car Attached +3 500 None +5 000 Porch, Patio, Deck, Fire laces etc. 2 Porch 1 Patio +1,500 1 Fire lace 0 None +2,000 None +2 000 Fence Pool etc. Warehouse None +2 500 None +2 500 Other Gazebo None +1500 None +1500 Net Ad'. total + - 158 360 + - 156180 + - Adjusted Sales Price of Com arable None 333 360 None 356180 Date, Price and Data None in the last 3f None in the past 12 months None in the past 12 months Source for prior sales NtA N/A NlA within ear of a raisal Assessment Reco Assessment Records Assessment Records Comments: The three sto buildin to the rear of the lot is currentt used as a warehouse b a heatin contract r. The current owner was in the fuel oil and heatin business. He sold the business and the new owner is located in Mechanicsbur a roximatet 5 miles from the sub'ect. The 3 sto buildin was used as a warehouse for arts connected with this business. The new owner has continued usin the buildin and a s a rent of 1 000 er month. The buildin is a walku 3 sto structure. There are no modern conveniences in this buildin .There is electric to the buildin .The buildin is considered to be in fair to avera a condition. Hi hest and Best use. The im rovements on the roe are the 2.5 sto residence at the front of the ro ert .The lar e 2 car detached ara a with worksho and office. The three sto warehouse behind the ara e. There is a ood size arkin area for 20+ cars. The lot is 100 x 900 a roximate which is over 2 acres of land. The zonin is C-2 Commercial General. The condition of the house is rated as bein in Good to Avera a condition. The detached ara a is rated as bein in Avera a condition and the warehouse is rated as bein in avera a to fair condition. After reviewin this information it is the o inion of this a raiser that the hi hest and best use is for a mixed commercial and residential use which is the current use. The ro has 2 acres of land but it is onl 160 feet wide and has on 100 feet fronts a alon the south side of Ge sbur Road. The land does not lend itself to commercial develo meat. It is believed that the roe is best utilized for a small business such as the former use for a heatin and fuel oil delive business. The ara a is set u with a se erate entrance into the office area. it is believed the owner would utilize the ara a for a small in home business and use the warehouse buildin for store e. It is believed that the residence could be used b the owner or rented out. The hi hest and best use is believed to be for a mixed commercial and residential use. The three sto warehouse buildin will be iven a minimum value in this a raisal for the followin reasons. It is currentl eneratin 51 000 er month income however it is uestionable how Ion this will continue. The business leasin the buildin is not {ocated close to this site and the urchased the business and it is believed a arran ement was worked out for leasin this buildin . If this tenant moves out it is believed it would be ve difficult to rent this buildin Buchanan Buchanan as of June S, 2t~~1 ~~ Business Valuations & Strategies PC 3402 N. 4th Street, Harrisburg, PA 17110 717-234-7060 or 800-423-0252 business-valuation-expert.com We Yalue Your ~3usness -Literally CPS AB~y ~+~ TABLE OF CONTENTS Conclusion of Value .. .. .. 1 .. .. ......................................................................................................... ... Valuation Summary 2 .................................................................................................................. ... Analysis of the Partnership 3 ................................................................................................... ... BUSINESS PURPOSE ........................................................................................................................................... ... 3 OPERATIONS .................................................................................................................................................... ... 3 MANAGEMENT ................................................................................................................................................ ... 3 PARTNERS & PREVIOUS TRANSFERS OF EQUITY ....................................................................................................... ... 3 ENTITY TYPE 8c PARTNERSHIP AGREEMENT ............................................................................................................. ... 3 FI NAN CIAL ANALYST 5 ......................................................................................................................................... ... 3 DISTRIBUTION PAYING CAPACITY .......................................................................................................................... ... 4 INDUSTRY He COMPETITIVE ENVIRONMENT ............................................................................................................. ... 4 ECONOMIC ENVIRONMENT ................................................................................................................................. ... 4 Valuation Approach 8 .................................................................................................................. ... HYPOTHETICAL SALE .......................................................................................................................................... ... 8 Hypothetical Buyer ................................................................................................................................... ... 9 Hypothetical Seller ................................................................................................................................... ... 9 Fractional Interests ................................................................................................................................... ... 9 Summary .................................................................................................................................................. ... 9 PARTNERSHIP INTERESTS .................................................................................................................................... . 10 Value of Underlying Assets ....................................................................................................................... .10 NetAsset Value ........................................................................................................................................ . 10 Market Price Determination ..................................................................................................................... . 10 SUMMARY &CONCLUSIONS ................................................................................................................................ . 12 Engagement Exhibits 13 ................................................................................................................ E1-STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS ................................................................................. . 14 E2 -SOURCES OF INFORMATION ......................................................................................................................... . 15 E3 -CERTIFICATIONS AND REPRESENTATIONS OF DAVID E. COFFMAN ......................................................................... . 16 E4 -PROFESSIONAL QUALIFICATIONS OF DAVID E. COFFMAN .................................................................................... . 17 Financial Exhibits 18 ...................................................................................................................... F1-BALANCE SHEETS --HISTORICAL &COMMON-SIZE ............................................................................................ . 19 F2 -INCOME STATEMENTS -- HISTORICAL &COMMON-SIZE ...................................................................................... . 20 F3-CASH FLOW STATEMENTS-COMPARATIVE HISTORICAL ..................................................................................... . 21 Conclusion of Value September 12, 2011 Michael Buchanan, Executor Estate of Lewis B. Buchanan cJo Jan L. Brown & Associates 845 Sir Thomas Court, Suite 12 Harrisburg, PA 17109 Re: Buchanan & Buchanan ("the Partnership") We have performed a valuation engagement, as that term is defined in the Statement on Standards for Valuation Services (SSVS) of the American institute of Certified Public Accountants, of a 50% equity interest in Buchanan & Buchanan ("the Partnership") as of tune 5, 2011. This valuation was performed solely to assist in determining the value of the Company for inheritance tax and estate purposes; the resulting estimate of value should not be used for any other purpose or by any other party for any purpose. This valuation engagement was conducted in accordance with the SSVS. The estimate of value that results from a valuation engagement is expressed as a conclusion of value. The standard of value used in this valuation is Farr Market Value. Fair market value is the price, in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arms length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts. The Partnership is valued as a stand-alone business entity (presuming its current status of capital, management, and employees), and under the premise that it is an ongoing operating business enterprise and is expected to continue to operate into the future. Although our valuation is intended to estimate fair market value, we assume no responsibility for the inability of a seller or buyer to obtain a sale or purchase contract at that price. Based on our analysis, as described in this valuation report, the estimate of value of a 50% equity interest in Buchanan & Buchanan as of June 5, 2011: $120,683 This conclusion is subject to the Statement of Assumptions and Limiting Conditions found in Exhibit E1. We have no obligation to update this report or our conclusion of value for information that comes to our attention after the date of this report. David E. Coffman CPA/ABV/CFF, CVA President & CEO Business Valuations & Strategies PC 1 Valuation Summary Date of valuation:lune 5, 2011 Date of report: September 12, 2011 Company: Buchanan & Buchanan, a partnership Ownership interest valued: 50% equity interest Purpose of valuation: Inheritance tax and estate purposes Standard of value: Fair market value Premise of value: Going concern Type of report: Detailed Scope limitations: None Significant assumptions and limitations: See Exhibit E1 Valuation methods considered: Guideline publicly traded partnership, fractional interest discount, and adjusted net asset value Selected valuation method: Adjusted net asset value Valuation conclusion: $ 120,683 2 Analysis of the Partnership tt~~~~~~~ ^sttr~~c~ The Buchanan & Buchanan partnership (the "Partnership") was formed in April 1985 for the business of buying, improving, leasing and selling real estate. t~~`;~r° E:~, The Partnership acquired a 4 unit apartment building located at 1556 Main Street, Mechanicsburg, Cumberland County, PA. It leases the apartments to individuals and families. The partners manage the Partnership on an equal basis. h~.~t ~ : ~ :-~; -~ 'r~B~€~~.t "ransfers of ~cia~~~~~ The equity of Partnership is owned by: Lewis B. Buchanan Michael D. Buchanan Tvpe Ownership % General 50 General 50 There have been no sales or transfers of equity since inception. Et~i . E=t ~'=n , ,t j~~ersh~ A~r~etn+~t~t The Company operates as a general partnership under a partnership agreement dated April 1985. The partners share equity, profits and losses equally. Upon the death or withdrawal of a partner, the remaining partner may purchase the exiting partner's interest based on the book value of the Partnership assets after adjusting the value of the real estate to its appraised fair market value. This analysis includes an evaluation of the Partnership's common-size financial information from the 2010, 2009 & 2008 federal partnership income tax returns and internal year-to-date profit & loss statement and balance sheet as of June 5, 2011. The Partnership uses the cash basis of accounting which affects its financial statements in the following ways. The income statements reflect income that is recorded when received rather than when earned, and expenses that are recorded when paid rather than when incurred. The balance sheets do not include trade receivables and payables. Cash basis accounting is common in the residential real estate rental industry. Rental companies typically do not have significant amounts of receivables ar payables that distort cash basis financial statements. In order to portray the relative size of financial statement items for comparison over time, each line item in the common-size financial statements is expressed as a percentage of total assets or total revenue. The historical and common-size financial statements are summarized in Exhibits F1 through F3. Since the Partnership is essentially a holding company for a single parcel of residential real estate, traditional financial ratios have little meaning. Therefore, we did not compare the financial statements and ratios to the Lessors of Residential Real Estate industry (NAILS 53111). The value of the Partnership is driven by the value of the underlying asset, not by its financial performance or condition. 3 tft°R~tztStar> F'ayir>:~ C~~t~tiiw A partnership's ability to generate cash flow and its history of distributing cash are primary factors in determining its value. The Partnership has historically distributed most of 'sts earnings to the partners. The cash flow of the Partnership and the distributions to partners have been decreasing steadily as expenses have grown faster than rental income. Since the Partnership distributes most of its earnings to the partners, the distribution paying capacity of the Partnership was analyzed by considering income-based valuation methods. Ittctttt° :~~~~x~aefit~~c= tt~t-t~t~tnett Overall The market for real estate has undergone some fundamental changes due to and during the financial crisis that began in late 2008.Owning your own home is not the investment it used to be. Values have fallen and are not likely to recover to pre-crisis levels for a long time. In the future, home values are expected to grow more slowly and be more volatile. Despite a huge supply of existing homes and mortgage rates at historic lows, the housing market continues to flounder. Many people are not able to buy homes and get mortgages due to unemployment and credit problems. The housing market slump bodes well for landlords as more people choose or are forced to rent instead of buy. In many areas there has been limited residential development over the past several years. As more people rent, the demand for residential rental units will increase. The increased demand for a limited supply of rental housing should drive up rental rates and allow landlords to be more selective when choosing tenants. Lower interest rates and more stable energy costs will help landlords offset higher property taxes and the increasing cost of municipal services. As cash flows from residential real estate rental properties improve they will become more attractive investments and eventually drive up property values. Also supporting this trend is the increased volatility and disappointing returns of competing investments like home ownership, retirement plans, stocks and bonds. Local The real estate market in Central PA has weathered the financial crisis better than many areas, but housing activity and values are not expected to resume significant growth for some time. The Partnership should have no problem keeping its property fully rented and be able to raise rents as the rental market heats up. °,t°€at~ta~~ aix°tttitt,Tt~ We analyzed the following indicators to assess the economic environment as of the 1st quarter of 2011. OveraN Growth • Indicator -Change in Gross Domestic Product (GDP) which measures the total economic output of the U.S. • Source - Bureau of Economic Analysis • Current -GDP growth slowed to 1.8% in the first quarter of 2011 from 3.1% in the fourth quarter of 2010. • Forecast -GDP growth for the year {2011) is expected to range between 2.5% and 3.5%. Real GDP Growth Compounded annual rates of change 9- 6- 3- o -- - --- 3- _6 _ ~9~ i i i i zone zoos zoro zo,i 4 Leading • Indicator -Leading Index is a composite of 10 forward-looking economic indicators. • Source-The Conference Board • Current-The index increased for the seventh consecutive month in March 2011 to 114.1. • Trend -The index is indicating modest economic growth through 2011. Manufacturing Industrial Production • Indicator -Industrial production index • Source -Federal Reserve • Current -The index rose slightly to 92.9 in March 2011. Overall production rose 5.9% from March 2010. • Trend -Industrial production is expected to continue improving slowly in 2011. Industrial Production and ISM Index Percent change Index a ISM - ~ 2 _ (r+ght scale) _ ~ o so Industrial Production (bar) 1 _ (left scale) _ ~ .2 - _ - sa 2009 2010 2011 ISM Survey ` • Indicator -Survey of Manufacturing Activity • Source -Institute of Supply Management (ISM) • Current -The index fell for the first time in seven months to 61.2 in March 2011. A score of 50 or more indicates growth in manufacturing activity. A score in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Whether the score is rising or falling is also important. • Trend -The index is showing signs of weakness in the manufacturing sector. Services • Indicator-Survey of Non- Manufacturing Activity • Source -Institute of Supply Management (ISM) • Current -The index fell for the first time in seven months to 57.3 in March 2011. A score of 50 or more indicates growth. Whether the score is rising or falling is also important. • Trend -The index is showing weakness in the services sector. Retail • Indicator -Advance monthly sales for retail and food services • Source -Census Bureau • Current -Retail sales for the first quarter of 2011 were up 8.1% from the same period last year. • Trend -Retail sales are expected to improve slowly through most of 2011. Retail & Food Services Percent change 3' Total (bar) 2- ,_ E~~ e Ex. ., _ F1~tds z_ .g ~ 2009 I 2010 I 2011 5 Housing Real Estate • Indicator- New home sales • Source -Census Bureau • Current -Home sales were down 21.9% in March 2011 from the same period last year. • Trend -Home sales are expected to remain flat through most of 2011. Construction • Indicator- Housing starts • Source -Census Bureau • Current -Housing starts were down 13.4% in March 2011 from the same period last year. • Trend -Housing starts are expected to remain flat through most of 2011. Housing Starts and New Nome Sales Millions. annual ra[e Millions. annual rate os - - o.as New Home Sales o.e - (right scale) aao o.~ , ~ - o.3s 0.6 - - 0.30 o. s - Housing Starts - o.zs (lett scale] o.a --I I I _I o.zo zooo 2oto zo11 Consumer Spending • Indicator- Personal consumption expenditures (PCE) • Source -Bureau of Economic Analysis • Current -Consumer spending rose 3.5% in 2010 and at an annual rate of 6.0% in the first quarter of 2011. • Trend -Consumer spending is expected rise modestly through most of 2011. Confidence • Indicator -Consumer sentiment • Source -University of Michigan • Current -The index fell 4.4 points during the first quarter to 69.8 as of April 1, 2011. • Trend -Consumer confidence is expected to remain low until the job market improves significantly. Real Consumption Compountled annual rates of change a.5 - 3.U - ,.5 - -1.5- 3.0 - -as -I I I I 2009 2nto 2nt1 Consumer Sentiment {U. of Michigan) Index tto - ,oo - ~o - 80 - ~o - sa - 50, I I I I I I 2006 2007 2008 2009 2010 2011 6 Prices/Inflation Consumer • Indicator-Consumer price index (CPI) • Source - Bureau of Labor Statistics • Current -The index rose at a 2.7% rate for the twelve months ended March 2011. • Trend -Consumer prices are expected to increase at a slightly higher rate through 2011. Producer • indicator -Producer price index (PPI) • Source -Bureau of labor Statistics • Current -The index rose 5.7% during the twelve months ended March 2011. • Trend -Producer prices are expected to increase at a slightly higher rate through 2011. Employment Consumer Price Index Compounded annual rates of change ,2 - 9- s _ CPI {Uar) .g . Excl. Food 8 Energy s ~ zoos ~ 2ofo I 2oif I Producer Price Index, Finished Goods Compounded annual rates of change ~n - 20 - PPI (bai) ,° _ o -!~~~ -1° , Excl. Food & Energy '20 -1 z°os zofo zon Unemployment Rate Fared vl le;bor '~xce 11.2 - r4.2-. E2 - ].2 - +.2, zcf~a ~ zom ~ zoio ~ 2oir I • Indicator- Unemployment rate • Source - Bureau of Labor Statistics • Current -The unemployment rate fell from 9.4% in December to 8.8% in March 2011. • Trend -The unemployment rate is expected to remain near 9% for some time then start a slow decline. Interest Rates • Indicator -Short-term rates are strongly influenced by the Federal Reserve, while long-term rates are more market-based. • Source -Wall Street Journal • Current -Short term rates are stable at near zero. Long term rates are increasing. • Trend -Short-term rates are expected to remain low as long as inflation remains low. Long-term rates are expected to continue increasing modestly then stabilize later in 2011. Interest Rates Percent s- io va~r c _ Treasury J^ ,_ 1 ~ "~~// 2 - I ~~ ,~ 3-Mw h Treasury 2008 2](X_ 2010 20r1 7 Corporate Profits Corpwsta arorns ~_ Indicator-Corporate profits "~`y"`` • Source - Bureau of Economic Analysis -_ ~"~~'"-°'"' • Current -Corporate profits rase 29.2% for all of ,~ 2010 and 8.5% from the first quarter of 2010 to the ._ ~~~A='° same quarter in the current year. `" • Trend -Corporate profits are expected to continue ~ " " ` ° ~ ~ `~ "~ "` ~ '`" " " '~ ~ ' '~ ~' " '~ ~ ~~ ` '~ "~ improving, but at a slower rate. Pennsylvania & Regional The amount and availability of regional and state level economic data is limited. The data that is available suggests that the conditions within Pennsylvania are closely related to national economic conditions. The unemployment rate for Pennsylvania was 7.8% in March 2011, down from 8.5% in December. The unemployment rates for the Harrisburg (7.2%) Lancaster (6.8%), Lebanon (6.5%), and York (7.7%) areas for March 2011 were steady or down slightly from the previous quarter, and remain below the state and national rates. Summary The economic recovery is showing signs of weakness. The housing market seems to be stuck near the bottom of the market with no significant short-term improvement in sight. The one bright spot in the economy, the manufacturing sector, is showing signs of weakness. Unemployment also appears stuck near 9% for the foreseeable future. Consumer confidence and spending remain low and are unlikely to improve much until the job market opens up. Slow economic growth and high unemployment may continue well into 2012. The economic environment directly impacts the operations of the Partnership in many ways such as: rate of rent increase, available cash flow, and risk factors. These elements are already incorporated into the valuation methods used in this engagement, so no specific adjustment for the economic environment is necessary. Valuation Approach Hypcttzetical ~,_1e~ The valuation approaches and methods used in this report are based on the hypothetical sale of an interest in the Partnership between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm's length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts. Interests in real estate partnerships are typically sold in two ways. The most common way is in conjunction with the sale of the real estate held by the partnership. The partnership collects the proceeds from the sale, pays all obligations and distributes any remaining proceeds to the partners based on their share of equity. Then the partnership is dissolved. The partnership interest may also be sold to the other partners. The price is determined pursuant to the partnership agreement or subject to state partnership laws. 8 IiYotlietical i~.~~:°~,. There are two basic types of buyers of real estate partnerships. The most common type is an individual (or small group of individuals) who want to buy or control the real estate held by the partnership. This type of buyer is most interested in a positive cash flow that can be distributed to the new owner(s). This type of buyer typically will actively manage the property. The second type of buyer is an investor. An investor can be an individual, group of individuals or a company that wants to buy the real estate held by the partnership and intends to hire someone to manage the property. An investor is also interested in a positive cash flow, but seeks tax write-offs from depreciation and a return on investment upon the sale of the property. An investor may also be interested in making immediate improvements to increase value and resell the property quickly. Buyers can also be categorized by their relationship to the seller. Most real estate partnerships are sold in conjunction with the sale of the real estate held by the partnership to a third party. The other common type of buyer is the other partners. They often buy a partner's interest if they withdraw from the partnership or die. The buy-out procedures and price are typically based on provisions in the partnership agreement. Hy~~i~tl~et;iral ,~aellec~ As with buyers, there are two basic types of sellers (owners) of real estate partnerships. By far the most common type is an active, general partner who personally manages the property. This type of seller is driven primarily by personal factors. The reason for selling and the timing of the sale are based on the partner(s) personal situation. Passive, limited partners generally seek to achieve a specific return on investment. A major portion of the expected return is the eventual sale of the real estate held by the partnership. This type of seller typically monitors the value of the property and offers it for sale when the proceeds are expected to meet their required rate of return. This type of seller is likely to withdraw the property from the market if the required return cannot be obtained, and continue to manage it. An investor may also seek to sell when the performance of the property no longer meets their expectations. F't°~~ctiox~~~ Iattez•csts A fractional interest in a small, real estate partnership is virtually impossible to sell to a third party. Few buyers are willing to buy a partial interest, even if it is a controlling one. They want to buy and control the underlying assets not the partnership. Therefore, partial interests in small real estate partnerships are typically not sold to third parties. The partnership is dissolved after the sale of the underlying assets and satisfaction of all obligations. Any remaining proceeds are distributed to the partners based on their share of equity. Fractional interests may also be sold or transferred to the other partners or related parties. Other partners may purchase the interest upon the death or withdrawal of a partner. Transfers of fractional interests are often part of a gifting program to gradually shift ownership to family members. Suxnrta~~t'y Interests inclosely-held real estate partnerships are most likely to be sold in conjunction with the sale of the real estate held by the partnership to a third party. The most likely type of buyer would be either an active general partner or passive investor. The most likely type of seller would be an active general partner looking to sell for personal reasons. The valuation methods used in this report are designed to produce the value of only the assets included in a typical asset sale. An interest in a partnership is a security issued by a closely-held business enterprise, not a direct interest in the asset(s) held by the partnership. An interest in the partnership is worth less than a direct ownership share of the asset(s) because the interest does not provide direct control of the asset(s), and the interest is not as marketable as the asset(s). Valuing a partnership interest involves athree-step process. Step 1 First, the value of the partnership's underlying assets must be determined. Value is typically determined by independent appraisal or other methods appropriate for the type of asset. Step 2 The equity or net asset value (NAV) of the partnership is calculated by adjusting the value of the underlying asset by subtracting any outstanding liabilities and adding any other assets. The NAV is allocated among the partners pursuant to the partnership agreement. Step 3 The final step is to estimate the market price of a partnership interest by determining its relationship to the net asset value of the partnership. This relationship can be determined using market, income or asset based valuation methods. ;_ ~ ° f~ader•lririg tlssets The Partnership currently owns a 4 unit apartment building situated on 1.3 acres of land at 1556 Main Street, Mechanicsburg, Lower Allen Township, Cumberland County, PA. The property was appraised at a value of $240,000 as of August 22, 2011 by Robert R. Jones & Associates. We relied on the conclusions of this appraisal without further verification. The book values of the other assets and liabilities were assumed to be reasonable estimates of their respective current market values. l~' _ _ ~~It~c As of tune 5, 2011 the Partnership had the following assets and liabilities: Cash 2,653 Equipment 2,303 Estimated value of the Partnership's real estate 240 000 Less: Current liabilities 3 590 Total Value of Partnership Equity (Net Asset Value) 241,366 X 50% Net Asset Value of a 50% Interest 120.683 ~Ia~-l~e#: ": ic:t~ 3 etcxr~~st%rltia~t~ ~vlrr~-t~r ~ ~ ~~~:r~?~IeCtrr~cfs Guideline Publicly Traded Partnership Method The premise of this method is that prices of publicly traded partnerships with similar attributes provide objective evidence as to the values at which investors are willing to buy and sell limited partnership interests. The application of this method depends on the selection of guideline publicly traded interests that are similar enough to the Partnership to provide a meaningful comparison. 10 Publicly traded limited partnerships are subject to a higher level of public scrutiny that provides greater assurance to investors that earnings will be distributed. Privately held interests have little assurance that earnings will be distributed. Publicly traded interests are traded on a secondary exchange. No public market exists for privately held limited partnership interests. The secondary market for publicly traded limited partnerships is thinly traded with a limited number of transactions. These transactions are often complicated, time consuming, and under distressed circumstances. The secondary market for publicly traded partnerships is not a truly open and active market, and involves interests that are not comparable to privately held interests. Therefore, no consideration was given to this method. Fractional Interest Discount Method The fractional interest discount is a combination of a discount for lack of control, and a discount for lack of marketability. The use of these two discounts is supported by studies of mergers and acquisitions, restricted stocks and pre-IPOs. The hypothetical sale of the Interest would most likely be either: 1) in conjunction with the sale of the real estate held by the partnership, subsequent dissolution of the partnership, and distribution of the net proceeds to the partners based on their share of equity, or 2) to the other partner according to the provisions of the partnership agreement. In either event the proceeds would be distributed equally to the partners so a discount for lack of control is not appropriate. The Interest is marketable to the other partner under the provisions of the partnership agreement. The sale of the real estate is dependent on the marketability of the property, not the partnership interest. Therefore, a discount for lack of marketability is not appropriate. Since the hypothetical sale of the Interest is not comparable to data from mergers and acquisitions, restricted stocks and pre-IPOs, and both types of discounts are not applicable, we did not use the fractional interest discount method. Ita~'t - ~ €' ' ~ , , -'a ~ f l~te~ftc~c~s The income approach serves to estimate value by considering the income (benefits) generated by an asset over a period of time. This approach is based on the fundamental valuation principle that the value of an asset is equal to the present worth of the future benefits of its ownership. The partnership's ability to generate cash flow and its history of distributing cash are primary factors in determining its value. The Partnership generates minimal cash flow. The value of an interest in the Partnership comes primarily from the value of the real estate it holds, not the income it generates. Therefore, an income-based method is not appropriate and was not considered. i' '~dk~ d'~~"QSf~L~ ArYI ~it' `'.~.y Adjusted Net Asset Value The premise of an asset-based approach is that the value of a partnership interest is based on the value of the partnership's underlying assets. 11 A near-term, hypothetical sale of the real estate held by the partnership would incur transaction costs including commissions, transfer taxes and other closing costs that are estimated at 8.0% of the sale price or $19,200. A sale of the Interest to the other partner would incur minimal costs. Since the partnership is not planning to sell the real estate, we did not deduct them from the net asset value. The adjusted net asset value of a 50% interest in the Partnership as of June 5, 2011 was $120,683 and is described in detail in the Net Asset Value section of the report. The Partnership generates minimal cash flow. The value of an interest in the Partnership comes primarily from the value of the real estate it holds, not the income it generates. Therefore, anasset-based method was considered to be the most appropriate one. Summat'Y ~ (~~~rtc~lu~ictt~s The objective of this valuation is to estimate the value of a 50 percent partnership interest in Buchanan & Buchanan as of June 5, 2011, for the purpose stated. In reaching our conclusion, we considered the approaches and methods discussed in this report. We found the Adjusted Net Asset Value Method to be the most appropriate one. Conclusion of Value Adjusted Net Asset Value of a 50% interest $120,683 12 Engagement Exhibits E1- Statement of Assumptions and Limiting Conditions E2 -Sources of Information E3 -Certifications and Representations of David E. Coffman E4 -Professional Qualifications of David E. Coffman 13 ~~_ -~ ~e~: ~_~~~c~nt l"f~~s~xtnp>~icans and l~imi~~ ~e~radtir~ti<~ This valuation is subject to the following assumptions and limiting conditions: 1. The conclusion of value arrived at herein is valid only for the stated purpose as of the date of the valuation. 2. Tax returns, financial statements and other related information provided by the Partnership or its representatives, in the course of this engagement, have been accepted without any verification as fully and correctly reflecting the enterprise's business conditions and operating results far the respective periods, except as specifically noted herein. We have not audited, reviewed, or compiled the financial information provided to me and accordingly, we express no audit opinion or any other of assurance on this information. 3. Public information, and industry and statistical information have been obtained from sources considered to be reliable. However, we make no representation as to the accuracy or completeness of such information and have performed no procedures to corroborate the information. 4. The conclusion of value arrived at herein is based on the assumption that the current level of management expertise and effectiveness would continue to be maintained, and that the character and integrity of the enterprise through any sale, reorganization, exchange, or diminution of the owners' participation would not be materially or significantly changed. 5. This report and the conclusion of value arrived at herein are for the exclusive use of our client for the sole and specific purposes as noted herein. They may not be used for any other purpose or by any other party for any purpose. Furthermore the report and conclusion of value are not intended by the author and should not be construed by the reader to be investment advice in any manner whatsoever. The conclusion of value represents our considered opinion based on information furnished tome by the Partnership and other sources. 6. Neither all nor any part of the contents of this report (especially the conclusion of value, the identity of any valuation specialist(s), or the firm with which such valuation specials are connected or any reference to any of their professional designations) should be disseminated to the public through advertising media, public relations, news media, sales media, mail, direct transmittal, or any other means of communication without our prior written consent and approval. 7. Future services regarding the subject matter of this report, including, but not limited to testimony or attendance in court, shall not be required of me unless previous arrangements have been made in writing. 8. We have not made a specific compliance survey or analysis of the subject property to determine whether it is subject to, or in compliance with the American Disabilities Act, and this valuation does not consider the effect, if any, of noncompliance. 9. No change of any item in this report shall be made by anyone other than us, and we shall have no responsibility for any such unauthorized change. 10. Unless otherwise stated, no effort has been made to determine the possible effect, if any, on the subject business due to future Federal, state, or local legislation, including any environmental or ecological matters or interpretations thereof. 11. We did not interview the partners. 12. We relied on the appraisal of the real estate to verify the existence and condition of the property. 13. Except as noted, we have relied on the representations of the owners, management, and other third parties concerning the value and useful condition of all equipment, real estate, investments used in the business, and any other assets or liabilities, except as specifically stated to the contrary in this report. We have not attempted to confirm whether or not all assets of the business are free and clear of liens and encumbrances or that the entity has good title to ali assets. 14. This valuation reflects facts and conditions existing at the valuation date. Subsequent events have not been considered, and I have no obligation to update our report for such events and conditions. 15. David E. Coffman prepared this report. He has no present or contemplated future interest in the Partnership, no personal interest with respect to the parties involved, nor any other interest that might prevent us from performing an unbiased valuation. Our compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or use of, this report. 14 The following sources of information were used in performing the valuation engagement. Financial & Tax Information: • Federal partnership income tax returns for 2010, 2009 & 2008 • Internal profit & loss statement for 1/1 to 6/5/2011 • Internal balance sheet as of 6/5/2011 industry Data • Sageworks Industry Data Economic -Demographic Data • Bureau of Economic Analysis • Bureau of Labor Statistics • Census Bureau • institute for Supply Management • National Economic Trends -Federal Reserve of St. Louis Other • Partnership agreement between Lewis Buchanan and Michael Buchanan dated April 1985 • Small Residential Income Property Appraisal Report, Robert R. Jones & Associates, dated 8/22/2011 15 E3 -- C~°t°Cif`~~~ca~S t~c~ ~tc~pr~sentati~n~ cif :~~ic~ =. :~t'~m~an I certify that to the best of my knowledge and belief: 1. The analyses, opinions, and conclusion of value included in the valuation report are subject to the reported scope limitations, and the assumptions and limiting conditions specified in Exhibit E1, and they are the personal analyses, opinions, and conclusion of value of the valuation analyst. 2. The economic and industry data included in the valuation report have been obtained from various printed or electronic reference sources that the valuation analyst believes to be reliable. The valuation analyst has not performed any corroborating procedures to substantiate that data. 3. The valuation engagement was performed in accordance with the American Institute of Certified Public Accountants Statement on Standards for Valuation Services, the Professional Standards of the National Association of Certified Valuation Analysts, and the Uniform Standards of Professional Appraisal Practice. 4. The parties to which the information and use of the valuation report is restricted are identified; the valuation report is not intended to be and should not be used by anyone other than such parties. 5. The analyst's compensation is fee-based and is not contingent on the outcome of the valuation. 6. I am in compliance with the American Institute of Certified Public Accountants Accredited in Business Valuation (ABV) and National Association of Certified Valuation Analysts (CVA) re-certification requirements. 7. I do not have any direct or indirect, present or contemplated future interest in the Partnership. 8. Disclosure of the contents of this report is subject to the requirements of the National Association of Certified Valuation Analysts, and other professional organizations of which I am a member, related to review by their duly authorized representatives. wry""" David E. Coffman 16 ~~~`~~~c~~~~! l~ualif`icati~a~~~ [~ David i°;. 1'~xitan Academic and Professional Credentials • Certified Public Accountant (CPA) since 1978. Licensed in PA and NJ. • Certified Valuation Analyst (CVA) since 1997. • Accredited in Business Valuation (ABV) since 2001. • Certified in Financial Forensics (CFF) since 2008. • Bachelor of Science, Business Administration, Bloomsburg University, May 1976. Position and Experience • President & CEO of Business Valuations & Strategies PC, Harrisburg, PA. Founded in 1997. • President & CEO of NJ Business Valuations PC, Seaside Park, NJ. Founded in July 2008. • Specializing exclusively in small business valuation since 1997. • Has valued hundreds of small businesses. • Over 30 years of experience advising, owning and operating small businesses. • Has testified and been accepted as a business valuation expert in Clearfield, Clinton, Columbia, Lackawanna, Lancaster, Lycoming and Monroe counties in PA. Professional Affiliations • American Institute of Certified Public Accountants • Pennsylvania Institute of Certified Public Accountants, past president of the North and South Central Chapters • New Jersey Society of Certified Public Accountants • National Association of Certified Valuation Analysts 17 Financial Exhibits Historical Financial Data: F1-Balance Sheets -Historical & Common-size F2 -Income Statements -Historical & Common-size F3 -Cash Flow Statements -Comparative 18 Exhibit F1 Buchanan & Buchanan Balance Sheets -Historical & Common-Size Assets Current assets Cash Total current assets Property & equipment -net Other assets Total assets Liabilities Current liabilities Accounts payable Notes payable -short-term Total current liabilities Long-term liabilities Loans from shareholders Total liabilities Equity Beginning Net income (loss) Contributions (Distributions) Total equity Total liabilities & equity 6/5!2011 12!31 /2010 12/31 /2009 12/31!2008 % 2,653 12.2% 746 3.5% 831 3.9% 510 2.4% 2,653 12.2% 746 3.5°/ 831 3.9% 510 2.4°/ 19,136 87.8% 20,577 96.5% 20,509 96.1% 21,180 97.6% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 21,789 100.0% 21,323 100.0% 21,340 100.0% 21,690 100.0% 2,042 9.4% 0 0.0% 0 0.0% 0 0.0°/ 1,548 7.1 % 1, 524 7.1 % 0 0.0% 0 0.0% 3,590 16.5% 1,524 7.1% 0 0.0% 0 0.0% 0 0.0% 5,055 23.7% 6,340 29.7% 9,455 43.6% 0 0.0% 0 0.0% 0 0.0% 0 0.0°/ 3,590 16.5% 6,579 30.8% 6,340 29.7% 9,455 43.6% 14,744 67.7% 15,000 70.3% 12,235 57.3% 12,451 57.4% 742 3.4% 744 3.5% 5,265 24.7% 5,927 27.3% 2,713 12.5% (1,000) -4.7% (2,500) -11.7% (6,143) -28.3% 18,199 83.6% 14,744 69.1% 15,000 70.3% 12,235 56.4% 21,789 100.1 % 21,323 99.9% 21,340 100.0% 21,690 100.0% 19 Exhibit F2 Buchanan & Buchanan Income Statements -Historical & Common-Size Rent income Operating expenses Depreciation Repairs & maintenance Property taxes Interest expense Bank & credit card expenses Cleaning Insurance Miscellaneous expennes Professional fees Utilities Total operating expenses Operating income Loss on sale of investments Investment income Net income per tax return 1/1 to 6/5 2010 2009 2008 2011 12,677 100.0% 24,119 100.0% 27,090 100.0% 25,858 100.0% 1,441 11.4% 3,196 13.3% 5,671 20.9% 2,686 10.4% 651 5.1 % 7,737 32.1 % 2,773 10.2% 1,972 7.6% 0 0.0% 3,921 16.3% 3,634 13.4% 3,645 14.1% 77 0.6% 46 0.2% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 126 0.5% 0 0.0% 168 1.3% 735 3.0% 0 0.0% 299 1.2% 972 7.7% 914 3.8% 854 3.2% 1,032 4.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 2,130 16.8% 2,110 8.7% 2,340 8.6% 2,385 9.2% 6,496 51.2% 4,716 19.6% 6,429 23.7% 5,084 19.7% 11,935 94.1 % 23,375 97.0% 21,827 80.5% 17,103 66.2% 742 5.9% 744 3.0% 5,263 19.5% 8,755 33.8% 0 0.0% 0 0.0% 0 0.0% (2,859) -11.1% 0 0.0% 0 0.0% 2 0.0% 31 0.1 742 5.9% 744 3.0% 5,265 19.5% 5,927 22.8% Z~ Exhibit F3 Buchanan & Buchanan Cash Flow Statements -Comparative Historical Net income per tax return Non-cash items Depreciation Change in accounts payable Capital expenditures -net Debt proceeds (repayments) Net cash flow (equity) 1 /1 to 6/5 2011 2010 2009 2008 742 744 5,265 5,927 1,441 3,196 5,671 2,686 2,042 0 (3,264) (5,000) (7,030) (5,031) 239 (3,115) (3,728) 806 915 2,821 2,145 21