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from the viewpoint of a hypothetical seller, whether a block of
stock is a minority interest must be determined without regard to
the identity and holdings of the transferee. See Estate of Watts
v. Commissioner, 823 F.2d 483, 486-487 (11th Cir. 1987), affg.
T.C. Memo. 1985-595; Estate of Bright v. United States, 658 F.2d
at 1005-1006. Consequently, the fact that the 1980 Gifts enabled
Robert Furman to gain control of FIC can not be considered.
Both parties agree that a minority discount should be
applied in valuing both the 1980 Gifts and 1981 transfers by
decedents in the Recapitalization, although we do not understand
how respondent's expert determined that both a minority discount
and a control premium should be applied, since the two are
essentially opposites. We recognize that a hypothetical investor
would not be willing to purchase a minority interest in FIC
without a significant discount; no matter how successful the
corporation, a minority interest in a corporation that does not
pay dividends and whose stock does not have a ready market is of
limited value.
Petitioners' expert cited three articles on minority
discounts. The first, Bolten, "Discounts for Stocks of Closely
Held Corporations", 129 Tr. & Est. 47 (Dec. 1990), summarized
nine studies regarding discounts for minority interests that
indicated a mean discount of 29.63 percent. The second article,
"Survey Shows Trend Towards Larger Minority Discounts", 10 Est.
Planning 281 (Sept. 1983), summarized the results of a study
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