Estate of Helen Bolton Jameson, Deceased, Northern Trust Bank of Texas N.A., Independent Executor - Page 48

                                       - 48 -                                         

          with which we disagree.  Removing the Harris County Real Estate             
          from the assets lacking marketability reduces their percentage of           
          the total assets to approximately 3 percent.  Relying on                    
          respondent's expert's analysis, as adjusted, we conclude that               
          petitioner is entitled to a 3-percent discount for lack of                  
          marketability.                                                              
               3.   Nuisance Discount                                                 
               This Court has never recognized the application of a                   
          nuisance discount as such in determining the fair market value of           
          stock in a closely held corporation.  Petitioner seeks a discount           
          to reflect the nuisance that a 3-percent28 shareholder would pose           
          to a potential buyer of decedent's Johnco stock, contending that            
          Andrew could use his position as president of Johnco to sabotage            
          or impede a sale of decedent's Johnco stock.29  We do not think             
          Andrew was in such a position.  Andrew may have been president,             
          but Northern Trust, as executor of the Estate, controlled Johnco            
          and could have fired Andrew if he interfered unreasonably with              
          the sale of decedent's Johnco stock.  We also think the risk of             
          minority shareholder litigation on the valuation date is remote,            


               28 In accordance with its position that shares constituting            
          a 97-percent interest in Johnco were includable in decedent’s               
          estate, petitioner assumes that Andrew’s unified credit bequest             
          made him a 3-percent shareholder of Johnco.  We elsewhere                   
          conclude that the correct percentages are 98 and 2, respectively.           
               29 Petitioner also argues in this regard that Andrew could             
          interfere with a potential buyer's due diligence.  However, a               
          hypothetical willing buyer is deemed to have reasonable knowledge           
          of all relevant facts for purposes of defining the market value,            
          and thus petitioner's contention is irrelevant.                             

Page:  Previous  38  39  40  41  42  43  44  45  46  47  48  49  50  51  52  53  54  55  56  57  Next

Last modified: May 25, 2011