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In motions and pleadings, it was explained that the estate’s
appraiser valued the corporation’s assets at $18,552,231, and
using a 10-percent discount for marketability and a discount for
potential capital gains, arrived at a $14,910,000 reporting
value. Agreeing with the $18,552,231 value and the 10-percent
marketability discount, but not with the discount for potential
capital gains, respondent’s notice determination resulted in a
$16,428,719 value. In an amended pleading, respondent sought an
increased deficiency on the grounds that the estate was not
entitled to the 10-percent marketability discount for all assets
of the corporation. In particular, respondent sought an
increased deficiency to the extent that a 10-percent
marketability discount had been claimed regarding the
corporation’s cash assets and allowed in the notice of
deficiency.
Petitioners contend that respondent’s examining agent had
proposed to allow a discount on the “built-in capital gains” on
corporate assets actually sold after the decedent’s death. As
noted above, no such discount was allowed in respondent’s notice
of deficiency. Respondent’s counsel, in accord with the notice
of deficiency, maintained the litigating position that no
discount regarding capital gains tax was allowable in this case.
Petitioners contend that respondent’s counsel represented
respondent’s general litigating position as one that precluded,
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Last modified: May 25, 2011