- 44 -
Tarbell cited the usual restricted stock and IPO studies,22
and Rev. Rul. 77-287, 1977-2 C.B. 319, to support his opinion of
the discount. Rev. Rul 77-287, supra, sets forth guidelines for
valuing securities that cannot be immediately resold because they
are restricted from resale pursuant to Federal securities law.
The Willits shares are not restricted from trading by either
law or agreement. Petitioner offered no evidence of any
shareholders who were unable to sell their shares once offered
for sale. Therefore, there is no evidence that the low trading
volume is due to any reason other than the shareholder's
preference to hold the shares for long-term investment, rather
than sale. Accordingly, we find no persuasive evidence in the
record to justify reliance on the restricted stock studies in
determining an appropriate marketability discount.
22In addition to the Emory IPO studies earlier cited by
Gasiorowski and Spiro, see supra notes 9 and 16, Tarbell cited
the following restricted stock studies: Gelman, "An Economist-
Financial Analyst's Approach to Valuing Stock of a Closely Held
Company", 36 J. Taxn. 353 (June 1972); Moroney, "Most Courts
Overvalue Closely Held Stocks", 51 TAXES 144 (Mar. 1973);
Moroney, "Why 25 Percent Discount for Nonmarketability in One
Valuation, 100 Percent in Another?", 55 TAXES 316 (May 1977);
Maher, "Discounts for Lack of Marketability for Closely Held
Business Interests", 54 TAXES 562 (Sept. 1976); Trout,
"Estimation of the Discount Associated with the Transfer of
Restricted Securities", 55 TAXES 381 (June 1977); "Revenue Ruling
77-287 Revisited," SRC Quarterly Reports (Spring 1983); Bolten,
"Discounts for the Stocks of Closely Held Corporations", 123 Trs.
& Ests. 22 (Dec. 1984).
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