- 45 -
resulting uncertainties; see e.g., Dockery v. Commissioner, T.C.
Memo. 1998-114 (40-percent combined minority and marketability
discount); Estate of Mitchell v. Commissioner, T.C. Memo. 1997-
461 (35-percent combined minority and marketability discount);
LeFrak v. Commissioner, T.C. Memo. 1993-526 (30-percent combined
discount); Estate of Gallo v. Commissioner, T.C. Memo. 1985-363
(36-percent marketability discount, with references to minority
issues). We reject both respondent's combined discount of 17
percent and petitioners' separate 30-percent minority discount
and 35-percent marketability discount and conclude that a 40-
percent combined minority and marketability discount is
appropriate in this case.
d. Key-Person Discount
Where a corporation is substantially dependent upon the
services of one person, and where that person would no longer be
able to perform services for the corporation by reason of death
or incapacity, an investor would expect some form of discount
below fair market value when purchasing stock in the corporation
to compensate for the loss of that key employee. See Estate of
Huntsman v. Commissioner, 66 T.C. 861 (1976); Estate of Mitchell
v. Commissioner, supra; Estate of Feldmar v. Commissioner, T.C.
Memo. 1988-429; Estate of Yeager v. Commissioner, T.C. Memo.
1986-448. Although FIC could have purchased key-person life
insurance on Robert's life, a minority shareholder could not
compel FIC to purchase such insurance, and FIC had no such
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