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A marketability discount is generally thought to be
necessary where the buyer may incur out-of-pocket expenses or
other costs due to some aspect or defect in the asset being
purchased. For example, in an arm’s-length transaction involving
unlisted stock, there would be a significant discount reflecting
the out-of-pocket expenses or other costs to prepare a security
for public sale or to compensate the buyer of an unmarketable
security for its lack of liquidity. See Estate of Hall v.
Commissioner, 92 T.C. 312 (1989). Any cloud on title or
ownership of property, “no matter how slight, will have a
negative effect on the value of the property.” Adams v.
Commissioner, T.C. Memo. 1985-268. In Adams, the fair market
value of a bombsight was decided to be $75,000 and was discounted
by $10,000 (13.33 percent) for what appears to be a minimal cloud
on the taxpayer’s title. In certain cases involving the value of
shares of stock where there was question about the legal effect
of certain terms or attributes of the stock, the stock value was
discounted to, in part, reflect the legal questions and the
potential for litigation and costs attendant thereto. See Estate
of Newhouse v. Commissioner, 94 T.C. at 230-233; Estate of
Reynolds v. Commissioner, 55 T.C. 172, 193-195 (1970).
With respect to the DHL trademark outside the United States,
although as between DHL and DHLI, the ownership was in DHL, the
trademark had been registered in some 195 countries in DHLI’s,
MNV’s, or their subsidiaries’ or agents’ names without mention of
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