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corporation held on that date. We accept that starting point
under the transaction method as reasonable. According to the
expert reports, market conditions on the valuation date, like
market conditions in 1991 at the time of the FNFS transaction in
which a 23-percent premium was applied to the trade notes receiv-
able there involved, were more favorable than they were in 1989
at the time the B&W El Paso transaction occurred in which a 15-
percent premium was applied to the trade notes receivable in-
volved in that transaction.
A major difference between the parties' experts in valuing
the stock interest in question relates to the discounts that each
applied. Respondent's expert applied only a 10-percent minority
discount, and petitioner's expert applied a 35-percent combined
minority and lack-of-marketability discount. Discounts for a
minority interest and for lack of marketability are conceptually
distinct. Estate of Newhouse v. Commissioner, supra at 249. A
minority discount reflects the minority shareholder's inability
to compel liquidation and thereby realize a pro rata share of the
corporation's net asset value. A discount for lack of market-
ability reflects the fact that there is no ready market for the
stock of a closely held corporation. Id. The appropriate amount
of a minority discount and/or a lack-of-marketability discount is
a question of fact. Id.
We agree with both parties' experts that a minority discount
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