Ultimately the problem seems to be preferred shares driving the valuation of common shares. They obviously aren't the same, so I don't know why it happens. I'm not a lawyer so I don't know if there's a way around this.
Fair Market Value drives the value of common shares, not preferred share costs. FMV is derived using a formula the IRS has to project what a share in the company is worth and it is usually far less than what the latest investors paid.
