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reflects the fact that there is no ready market for shares in a
closely held corporation. Ascertaining the appropriate discount
for limited marketability is a factual determination. Critical
to this determination is an appreciation of the fundamental
elements of value that are used by an investor in making his or
her investment decision. Some of the relevant factors include:
(1) The cost of a similar company's stock; (2) an analysis of the
corporation's financial statements; (3) the corporation's
dividend-paying capacity and dividend payment history; (4) the
nature of the corporation, its history, its industry position,
and its economic outlook; (5) the corporation's management; (6)
the degree of control transferred with the block of stock to be
valued; (7) restrictions on transferability; (8) the period of
time for which an investor must hold the stock to realize a
sufficient return; (9)the corporation's redemption policy; and
(10) the cost and likelihood of a public offering of the stock to
be valued. See Estate of Gilford v. Commissioner, 88 T.C. 38, 60
(1987); Northern Trust Co. v. Commissioner, 87 T.C. 349, 383-389
(1986).
The factors limiting the marketability of stock in FIC in
February 1980 and August 1981 included the following: (1) FIC
had never paid dividends on its common stock; (2) the corporation
was managed and controlled by one individual; (3) the blocks of
stock to be transferred were minority interests; (4) a long
holding period was required to realize a return; (5) FIC had no
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