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Discount for Blockage
Finally, Gasiorowski considered the lack of marketability
due to the size of the block of shares held by petitioner.
The discount for blockage is based upon the theory that a
large block of stock cannot be marketed and turned into cash as
readily as a few shares; also, where there is only a limited
market for a stock, offering a large block of the stock depresses
the market and lowers the price that can be obtained. See Estate
of Sawade v. Commissioner, T.C. Memo. 1984-626, affd. 795 F.2d 45
(8th Cir. 1986); Richardson v. Commissioner, 151 F.2d 102, 103
(2d Cir. 1945), affg. a Memorandum Opinion of this Court; Phipps
v. Commissioner, 127 F.2d 214, 216 (10th Cir. 1942), affg. 43
B.T.A. 1010 (1941); Safe Deposit & Trust Co. v. Commissioner, 35
B.T.A. 259 (1937), affd. 95 F.2d 806 (4th Cir. 1938); sec.
20.2031-2(e), Estate Tax Regs.11 However, there is no
11In this regard, sec. 20.2031-2(e), Estate Tax Regs.,
provides:
In certain exceptional cases, the size of the block of
stock to be valued in relation to the number of shares
changing hands in sales may be relevant in determining
whether selling prices reflect the fair market value of
the block of stock to be valued. If the executor can
show that the block of stock to be valued is so large
in relation to the actual sales on the existing market
that it could not be liquidated in a reasonable time
without depressing the market, the price at which the
block could be sold as such outside the usual market,
as through an underwriter, may be a more accurate
indication of value than market quotations. * * *
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