- 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
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