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price, transformed their undivided interests into a “unity of
ownership” in the trustee. That is not to say that a discount
should not be applied for some other reason, but it does preclude
a control discount.
The Liquidating Trust was not a business entity, and it
should not be treated as a going concern. The stated purpose of
the trust was to liquidate or sell the realty so that a willing
buyer would not be concerned about control, income, organization
of the enterprise, etc. Instead, the buyer would be purchasing
the right to receive liquidation proceeds upon the property’s
sale.3
As a practical matter, the beneficiaries, by collectively
releasing their individual interests to the trustee, have
obviated most of the traditional concerns underlying the
application of a control discount. A potential buyer of a
partial interest would look to the underlying value of the assets
being liquidated. Accordingly, we hold that no control discount
should be applied to this situation.
The marketability discount relates to the question of
liquidity. Petitioner and respondent have addressed the
liquidity question in different ways. Petitioner, following the
same approach as used for the control-discount question, treats
3 The parties did not argue that there was any limitation on
the sale or transfer of liquidation proceeds. The parties agreed
that an interest in the Liquidating Trust could be transferred
with approval of at least 71 percent of the beneficiaries.
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Last modified: May 25, 2011