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policies.9 See generally Pratt et al., Valuing A Business: The
Analysis and Appraisal of Closely Held Companies 44 (3d ed.
1996), where the authors state:
The distribution of ownership can affect the value
of a particular business interest. If each of three
shareholders or partners owns a one-third interest, no
one has complete control. However, no one is in a
relatively inferior position unless only two of the
three have close ties with each other. In this
situation, the analyst could recognize that the size of
the discount from pro rata value for each equal
interest normally will be less than that for a minority
interest that has no control whatsoever.
Here, an owner of the estate's shares, although not an owner
of a majority interest in Seminole, has the ability to exert
influence over Seminole's operation, although not necessarily
control it, by virtue of the fact that he or she is the largest
single owner of Seminole stock. We find that an owner of the
estate's stock has the right to name at least one of Seminole's
five directors.10 The owner need only vote 38,624 of his or her
9 We do not depart from firmly established law that a
minority interest in a business is valued by taking into account
a minority interest discount. See, e.g., Estate of Bright v.
United States, 658 F.2d 999 (5th Cir. 1981); Estate of Newhouse
v. Commissioner, 94 T.C. 193, 249 (1990); Ward v. Commissioner,
87 T.C. 78, 106 (1986); Estate of Andrews v. Commissioner,
79 T.C. 938, 953 (1982). We simply hold that the per-share value
of the estate's shares, as the largest block of Seminole stock,
is not necessarily the same as the value of any other Seminole
share.
10 In fact, such an owner could end up electing two or more
board members. The record indicates that Seminole did not inform
all of its shareholders about its operation, including the time
and place of annual meetings. Thus, all of Seminole's
shareholders did not necessarily attend its annual meetings, the
result being that the total shares voted thereat may have been
fewer than the outstanding voting shares.
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