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of evidence that the gifts were worth less than $300,000 as
opening the door to our consideration of respondent’s argument
that the gifts were worth more than $300,000.
D. Petitioners’ Contention That a Portfolio Discount and
Minority and Lack of Marketability Discounts Totaling 44
Percent Apply
Petitioners’ expert, Robert K. Conklin (Conklin), estimated
that, if we recognize the partnership for Federal tax purposes, a
10-percent portfolio discount and discounts of 10 percent for
minority interest and 30 percent for lack of marketability apply,
for an aggregate discount of 44 percent.6
1. Portfolio Discount
Conklin concluded that a 10-percent portfolio discount
applies based on the assumption that it is unlikely that a buyer
could be found who would want to buy all of the Knight family
partnership’s assets. He provided no evidence to support that
assumption, see Rule 143(f)(1); Rose v. Commissioner, 88 T.C.
386, 401 (1987), affd. 868 F.2d 851 (6th Cir. 1989); Compaq
Computer Corp. v. Commissioner, T.C. Memo. 1999-220.
To estimate the amount of the portfolio discount, Conklin
relied on a report stating that conglomerate public companies
tend to sell at a discount of about 10 to 15 percent from their
6 Respondent’s expert, Francis X. Burns, testified about
the “fair value” but not the “fair market value” of the
partnership interests at issue in these cases. We have not
considered his testimony in deciding the fair market value of the
gifts.
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