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fractional interest properties based on partition costs.
For Federal estate tax purposes, property is generally
included in the decedent’s gross estate at its fair market value
at his death. See sec. 2031(a); sec. 20.2031-1(b), Estate Tax
Regs. Fair market value is defined as the price at which
property would change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or sell and
both having reasonable knowledge of relevant facts. See United
States v. Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-
1(b), Estate Tax Regs.
A determination of the fair market value of a group of items
includes a consideration of how many of the items would be
available for sale at any one time and the length of time
necessary to liquidate the entire inventory. See Calder v.
Commissioner, 85 T.C. 713, 722-723 (1985); Rimmer v.
Commissioner, T.C. Memo. 1995-215. Where the addition of a group
of similar items into the market within a short period of time
depresses the price of the items, a blockage discount is
appropriate.
When dealing with fractional interests in real property,
courts have held that the sum of all fractional interests can be
less than the whole and have used fractional interest discounts
to value undivided interests. See Harwood v. Commissioner, 82
T.C. 239, 267-268 (1984), affd. without published opinion 786
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