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discount with respect to real estate derives from the concept of
a blockage discount with respect to stock. According to the
concept of a blockage discount with respect to stock, a block of
stock may be so large in relation to the actual sales on the
existing market that it could not be liquidated within a rea-
sonable period of time without depressing the market. See, e.g.,
Phipps v. Commissioner, 127 F.2d 214, 216-217 (10th Cir. 1942),
affg. 43 B.T.A. 1010 (1941); Page v. Howell, 116 F.2d 158 (5th
Cir. 1940); Estate of Damon v. Commissioner, 49 T.C. 108, 117
(1967); sec. 20.2031-2(e), Estate Tax Regs. In the case of real
estate, the principle of supply and demand may warrant applica-
tion of an absorption discount. That is because the disposition
within a reasonable period of time of similar real properties
would result in those properties being in direct competition with
each other and other similar real properties in the marketplace.
Such an abrupt increase in supply would depress the price for
which those properties would sell, assuming that demand were to
remain constant. The element of competition, which is a price
depressant that is taken into account where similar real proper-
ties are valued as a whole, is not taken into account where such
properties are valued individually and the different values are
totaled.
In deciding whether to apply an absorption discount to the
stipulated value (viz., $20,366,470) of the remaining unimproved
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