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was not a “going concern”. Instead, respondent’s expert opined
that a willing buyer would be concerned with the question of
liquidity because of the time required to liquidate Residence.
Accordingly, respondent’s expert concluded that the agreed fair
market value should simply be adjusted or discounted for the time
value of money (i.e., the delay in realizing the liquidation
value of the assets).
Respondent’s expert used the May 1990 short-term Treasury
rate of 7.8 percent and added a 2.2-percent premium to account
for the lapse of time, arriving at a 10-percent discount rate.
Respondent’s expert noted that the long-term home mortgage rate
was a comparable 10.3 percent during the same time period. Based
on comparable properties, respondent’s expert calculated a 12.4-
month mean and 10-month median of time on the market. Using this
information, respondent’s expert arrived at a range of 9.5 to 11
percent for the discount and a value range of $7,355,141 to
$7,478,238.
Petitioner, citing Propstra v. United States, 680 F.2d 1248
(9th Cir. 1982), argues that a control discount applies because
the liquidating trust is no different from a business entity
holding property, and because decedent lacked control over the
property because she owned less than a majority interest.
Respondent agrees that the discount principles of Propstra v.
United States, supra, would apply in a case where the property in
question was used in a business. Respondent also agrees that
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