-25-
D. Discounts
1. Lack of Marketability
A discount for lack of marketability may apply to minority
interests in closely held corporations because there is no ready
market for those shares. Estate of Andrews v. Commissioner, 79
T.C. at 953. Respondent agrees that petitioners are entitled to
lack of marketability discounts for Home and Rock Hill stock.
Hawkins applied a 40-percent discount for lack of
marketability to his estimate of the value ($360.93) of the Home
stock, and a 45-percent discount to the value ($337.87) of the
Rock Hill stock. Hakala applied discounts of 25 percent for lack
of marketability to his estimate of the values of the Home ($518)
and Rock Hill ($546) stock.
We agree with Hawkins' use of 40 and 45 percent discounts
because: (a) The Barnes family has controlled Rock Hill for 80
years and the Helmly and Barnes families have controlled Home for
50 years; (b) both families intend to keep control of the
companies; (c) the families have taken steps such as implementing
a voting trust, bringing the younger generations into the
business, and buying insurance to avoid having to sell shares to
pay death taxes; (d) Home and Rock Hill pay much lower dividends
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