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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.
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