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attempted to apply our Mandelbaum analysis to the facts herein.
In Mandelbaum v. Commissioner, supra, the parties stipulated the
freely traded value of the corporation’s shares, and we were
asked to determine the marketability discount that applied to
that value. In the instant case, by contrast, the parties have
given us a stipulated value that neither party claims is the
subject stock’s freely traded value.6 Thus, we find that a
strict application of the Mandelbaum analysis is out of place in
the instant case.
The bottom line to this case is that petitioner asks us to
determine a marketability discount with respect to a value that
does not represent the stock’s freely traded value. This we will
not do. It is inappropriate to discount the value of the stock
for a lack of marketability in these circumstances. The discount
is confined to property that is being valued by reference to
prices paid for assertedly comparable property.
5 (...continued)
whenever the asset is transferred to a corporation that is wholly
owned by a single shareholder. To such a broad proposition, we
do not agree. Suffice it to say that a marketability discount
may be appropriate in such a case, but only to account for the
difference between the value of the shareholder’s stock and the
freely traded value of otherwise comparable stock that is listed
on an exchange.
6 Indeed, in response to a question from the Court at trial,
petitioner’s counsel acknowledged that the stipulated value was
merely a conciliatory amount that the parties reached following
their review of the appraisals.
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