- 54 -
supra at 83; Heiner v. Crosby, 24 F.2d 191, 193 (3d Cir. 1928).
The estate recognizes the fact that only similar properties
compete against each other in the market. The estate argues that
parcels of real estate are similar when they are used for the same
purpose, for example, as commercial rental property. According to
the estate, multiple pieces of similar use property will compete in
the market, regardless of each parcel's personal characteristics, and
a market absorption discount will apply when the market cannot absorb
all competing properties. We do not agree. We believe that two or
more parcels of real estate will compete against each other only when
the parcels are essentially similar in attributes such as use, value,
size, composition, and quality.
The estate, relying somewhat on the law of blockage as applied
to stock, argues that an across-the-board discount of 15 percent
applies to each parcel of the subject property. We do not agree.
In the case of stock, the shares of a single class of stock are
fungible, so the market draws no distinction between one share of
that class and another. Thus, a blockage discount that applies to
17(...continued)
market may place a premium on owning multiple properties of that
type. Rushton v. Commissioner, 498 F.2d 88, 90 n.3 (5th Cir.
1974), affg. 60 T.C. 272 (1973); see Bankers Trust Co. v. United
States, 207 Ct. Cl. 422, 518 F.2d 1210, 1222 n.8 (1975).
Although the subject properties were associated with the
decedent, a well-known developer, before his death, and much
interest in the subject properties was shown following the
decedent's death, we do not believe that a hypothetical buyer
would have paid a premium to buy any of the subject property.
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