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exclusively on the hypothetical buyer, to the exclusion of the
hypothetical seller. In this latter regard, we find unpersuasive
Mr. Alerding’s conclusion that a willing seller of a 100-percent
interest in CGT would have to discount the value of that interest
by 25 percent for lack of marketability. See Mandelbaum v.
Commissioner, T.C. Memo. 1995-255; Moore v. Commissioner,
T.C. Memo. 1991-546.
We also note that Mr. Alerding has limited experience with
respect to the valuation at hand. In response to questions from
the Court, Mr. Alerding acknowledged that he had no experience in
valuing television station property, and that he had reached his
conclusion without direct reference to similar publicly traded
property or stock. Although a marketability discount may apply
in some cases where 100 percent of the stock of an unlisted
corporation is held by one shareholder, a discount for lack of
marketability is inapplicable when the value of the unlisted
stock is not determined by reference to the price of listed
stock.5 This is a key point that Mr. Alerding missed when he
4 (...continued)
88 T.C. 1577, 1589 (1987); Estate of Trenchard v. Commissioner,
supra; accord Rev. Rul. 59-60, 1959-1 C.B. 237, 242 (controlling
interest in closely held company may command a higher price than
a minority interest).
5 As we understand the thrust of Mr. Alerding’s thinking
with respect to marketability discounts, the value of a single
asset is significantly reduced by a lack of marketability
(continued...)
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