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In certain exceptional cases, the size of the
block of stock to be valued in relation to the
number of shares changing hands in sales may be
relevant in determining whether selling prices
reflect the fair market value of the block of
stock to be valued. If the executor can show
that the block of stock to be valued is so
large in relation to the actual sales on the
existing market that it could not be liquidated
in a reasonable time without depressing the
market, the price at which the block could be
sold as such outside the usual market, as
through an underwriter, may be a more accurate
indication of value than market quotations. *
* *
This regulation further states that complete data and support of
any blockage discount must be submitted with a taxpayer's return.
There is no presumption of blockage. Maytag v. Commissioner,
187 F.2d 962 (10th Cir. 1951), affg. a Memorandum Opinion of this
Court. Petitioner bears the burden of proof in this regard.
Rushton v. Commissioner, 498 F.2d 88, 94 (5th Cir. 1974), affg. 60
T.C. 272 (1973); Maytag v. Commissioner, supra. "Blockage is not a
rule of law, but a question of fact. If the price obtainable for
a block of stock is influenced by the size of the block, the
existence and extent of this influence must be proven." Estate of
Christie v. Commissioner, T.C. Memo. 1974-95; see Estate of Damon
v. Commissioner, supra at 117. Several factors are helpful in
determining the size of an appropriate blockage discount: The mean
market quotation for the security on the valuation date, the size
of the block in relation to the total outstanding stock, the
trading activity in the stock on or near the valuation date, the
depth and trend of the market for the security, and the market
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