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Fuller concluded that a prudent investor would select the
private placement alternative and that, under that analysis, the
FOH shares should be valued at $5.8969 per share, a blockage
discount of 15 percent. Accordingly, each block of 2,460,580
shares of FOH would be valued at $14,509,794.
Fuller relied almost exclusively on the private placement
analysis that hinged on a single study. In so doing, he rejected
an entire body of restricted stock studies covering an extensive
time span. Fuller applied a 13.5-percent discount to the market
price of freely tradeable stock sold on the public market. The
study on which he relied, however, found that the discount for
restricted stock, when compared with freely tradeable stock sold
in a public market, averaged 42 percent of the market price.
Petitioner points to the subsequent sales of FOH shares by
the trusts, arguing that, although fair market value is
determined as of the date of death, consideration is given to
comparable sales occurring subsequent to the valuation date for
purposes of determining fair market value. Estate of Jung v.
Commissioner, 101 T.C. 412, 431 (1993). Petitioner concludes
that, because the sales by the trusts were consistent with the
valuations by Kimball and Cotler, the sales corroborate the value
claimed by petitioner and are substantial evidence of the fair
market value of the FOH stock on the valuation date.
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