- 39 -
of-marketability discount that is to be applied in valuing each of
the two blocks of ADDI&C's stock at issue.
We now turn to the balance of the lack-of-marketability
discount attributable to factors other than ADDI&C's built-in
capital gains tax that the parties and all of the experts agree
should be applied in ascertaining the fair market value on the
valuation date of each of the blocks of stock in question.
Petitioner and petitioner's experts believe that the percentage
amount thereof should be 35 percent, while respondent's expert Mr.
Thomson believes that it should be 23 percent. Because of other
differences among them, see chart above, the dollar amount of the
lack-of-marketability discount that each determined without regard
to any amount included therein that is attributable to ADDI&C's
built-in capital gains tax ranges from $15,265,630 (Mr. Howard's
determination) to $20,478,074 (Mr. Pratt's determination). Mr.
Thomson's determination thereof was $16,220,390.
Mr. Howard determined to apply a 35-percent lack-of-
marketability discount19 by relying on a number of so-called
restricted stock studies that are cited in his expert report.
Those studies show the amounts of discounts at which private
transactions in restricted stock (i.e., stock of public companies
19 Hereinafter, unless otherwise stated, all references to a
lack-of-marketability discount are to such a discount determined
without regard to ADDI&C's built-in capital gains tax that we
have found should be taken into account in arriving at the total
amount of the lack-of-marketability discount that should be
applied in this case.
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