Estate of Webster E. Kelley, Deceased, John R. Louden and Patricia L. Louden, Personal Representatives - Page 19
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US Tax Court > 2005 > Estate of Webster E. Kelley, Deceased, John R. Louden and Patricia L. Louden, Personal Representatives - Page 19
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which, unlike the sale of an interest in an investment company,
have relatively high assessment and monitoring costs. Id. As
these characteristics do not reflect the characteristics of an
investment company, we concluded in McCord, as we do here, that
the partnership is in the middle discount group, and a discount
of 20 percent (rounded from 20.36 percent) is applicable. Id.
In McCord, we did not refine the 20-percent discount any further
to incorporate specific characteristics of the partnership at
issue as we were not persuaded that we could refine the figure.
Id. at 395.
In Lappo v. Commissioner, T.C. Memo. 2003-258, we found that
a 21-percent initial discount was appropriate for an interest in
a family limited partnership consisting of marketable securities
and real estate subject to a long-term lease. We then made a
further upward adjustment of 3 percent to the marketability
discount accounting for characteristics specific to the
partnership, including: The partnership was closely held with no
real prospect of becoming publicly held; the partnership was
relatively small and not well known; there did not exist a
present market for the partnership interests; and the partnership
had a right of first refusal to purchase the interests. Id. As
these characteristics are similar to the characteristics in KLLP,
we find that a 3-percent upward adjustment is applicable.
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