- 46 -
insurance in effect.
We have found as facts that Robert was a key person in the
management of FIC, that FIC had no second layer of management,
and that Robert's contacts, experience, and managerial expertise
were critically important to the success of FIC. While the
operation of a franchised Burger King restaurant might appear to
be formulaic, FIC was a growing organization, and Robert's
responsibilities extended well beyond the operation of existing
restaurants. Moreover, since BKC had considerable control over
FIC's costs, expansion opportunities, competition, and ultimately
profits, Robert's personal relationships with the founders of BKC
were very helpful to the success of FIC. We therefore agree with
petitioners and find that a key-person discount of 10 percent was
appropriate in determining the value of FIC stock as of February
1980 and August 1981.
Accordingly, we allow a total discount of 46 percent in
valuing the FIC common stock transferred by decedents in 1980 and
1981, reflecting a combined minority and marketability discount
of 40 percent and a key-person discount of 10 percent.
4. Valuation Conclusions
On the basis of the foregoing, we find that for purposes of
computing the taxable gifts of Royal and the taxable gifts and
taxable estate of Maude: (1) The fair market value of 24 shares
of FIC common stock exchanged by each decedent in 1981 for
preferred stock of FIC was $424,552; (2) the fair market value of
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