- 6 -
percent discount, and respondent, on brief, seeks a 9.5-percent
discount.
OPINION
This case presents the recurrent issue of estate tax asset
valuation. The parties have agreed to the undiscounted value of
the asset at the time of decedent’s death. The unresolved
controversy concerns the percentage discount that should be
applied. Petitioner argues that this case involves a fractional
interest to which control and marketability discounts should be
applied. Conversely, respondent argues that, in a case where the
property is being liquidated, no control or marketability
discount should be applied. Respondent, however, would adjust
the agreed value for the time value of money or the time it takes
to liquidate the property. Converting the parties’ arguments to
numerical equivalents, petitioner and respondent would apply
discounts of 50 percent and 9.5 percent, respectively.
Property is generally included in the gross estate at its
fair market value on the date of a decedent's death. Sec.
2031(a);2 sec. 20.2031-1(b), Estate Tax Regs. Fair market value
is defined as "the price at which the property would change hands
between a willing buyer and a willing seller, neither being under
any compulsion to buy or to sell and both having reasonable
2 Unless otherwise indicated, section references are to the
Internal Revenue Code in effect on the date of decedent’s death.
Rule references are to this Court’s Rules of Practice and
Procedure.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011