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apply a 40-percent discount for lack of marketability. We
disagree.
Petitioner's expert relies on our analysis in Mandelbaum v.
Commissioner, T.C. Memo. 1995-255, affd. 91 F.3d 124 (3d Cir.
1996). In Mandelbaum, we used studies of marketability discounts
for sales of similar interests in similar companies to establish
a benchmark, then compared the facts and circumstances of that
case to the benchmark to conclude that a 30 percent discount for
lack of marketability applied. The corporation in that case was
very different from Beth W. Corp. It owned women's apparel
retail stores and had total annual revenue of $124,898,972 in
1985 that grew steadily to $270,903,000 in 1991. The
shareholders in Mandelbaum had agreements that restricted
transfer of stock.
Here, petitioner's expert cited a series of studies of
discounts for lack of marketability with various ranges,
averages, and medians. However, he did not show that the
companies in the studies were similar to Beth W. Corp. from the
standpoint of marketability. Thus, we do not use those studies
here.
We conclude that petitioner's expert overstated the amount
of the appropriate discount for lack of marketability. We
believe the proper amount of the discount for lack of
marketability is 15 percent.
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