-29-
interest discounts to value undivided interests. Estate of
Bonner v. United States, 84 F.3d 196, 197 (5th Cir. 1996); Estate
of Bright v. United States, 658 F.2d 999 (5th Cir. 1981); see,
e.g., Estate of Wildman v. Commissioner, T.C. Memo. 1989-667 (40-
percent discount); Estate of van Loben Sels v. Commissioner, T.C.
Memo. 1986-501 (60-percent discount).
Respondent offered no evidence relating to the size of the
discount that should apply, and concedes that a 5-percent
discount should apply. Petitioners' expert, Wiggins, testified
that the value of petitioner's undivided one-half interests in
timberland should be discounted by 44 percent.
a. Whether Petitioners' Property Interests Should Be
Discounted Absent Evidence of Actual Sales of
Fractional Interests in Real Property
Respondent contends that no discount larger than 5 percent
should apply because petitioner offered no evidence of actual
sales of fractional interests in real property. We disagree.
Pitts credibly testified that banks generally will not lend money
to the owner of a fractional interest in real property without
the consent of the coowner. We believe that Moses' and Pitts'
inability to find sales of fractional interests in comparable
real property in Florida shows that there was no market for
fractional interests in such real property.
Respondent points out that neither Moses nor Elmore applied
a discount for a fractional interest in real estate. We give
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