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$100 million ($8,432,007 divided by 8.5 percent equals
$99,200,082, rounded to $100 million). Petitioner's expert
chooses the 8.5-percent capitalization rate from the 5.9- to 9.2-
percent capitalization range reflected in the 1988 C&W report.
In his opinion, use of a high capitalization rate (namely, 8.5
percent) is particularly appropriate because of the economic
recession and poor commercial real estate environment that
existed in New York City in December of 1989.
From the $100 million estimated fair market value of the
Partnership Properties, petitioner's expert then subtracts
FC Partnership liabilities of $41,595,787 and calculates a net
liquidation value for the FC Partnership of $58,404,213 and a
pre-discount net liquidation value for each ownership unit in the
FC Partnership of $614,781 (1/95 of $58,404,213 equals $614,781).
In determining his combined minority and lack-of-
marketability discounts of 67.5 percent, petitioner's expert
relies primarily on a July 1989 sale to Mr. Silver for $125,000
of a fractional 62.5-percent interest in a single ownership unit
in the FC Partnership. Petitioner's expert calculates that the
$125,000 sale price for a 62.5-percent interest in a single
ownership unit reflected a 67.5-percent discount from the
$614,781 liquidation value of a single ownership unit.1
1 In December of 1985, two individuals inherited ownership of
fractional interests in a single ownership unit in the FC
(continued...)
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