Estate of Joseph R. Cloutier, Joseph A. Cloutier, Fiduciary - Page 11

                                       - 11 -                                         
          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.                                             






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011