- 19 -
of its assets in bonds, and investors in the bond fund could not
influence investment policy, the partnership “could be similar to
a closed-end bond fund”.8 He estimated that a lack of control
discount of 10 percent applies by evaluating the difference
between the trading value and the net asset values on October 21,
1994, of 10 publicly traded closed-end bond funds. The 10 funds
that Conklin chose are not comparable to the Knight family
partnership.9 We find unconvincing his use of data from
noncomparable entities to increase the discount. However, on
8 A publicly traded closed-end bond fund owns a fixed
number of bonds. The net asset value of those bonds held by a
closed-end fund is published. The value of an interest in a
closed-end fund may trade at a premium (i.e., above the net asset
value per share) or at a discount (i.e., below the net asset
value per share).
9 Only the Nuveen Municipal Value Fund had assets that were
comparable to the partnership. No hard and fast rule dictates
the number of comparables required, but courts have rejected use
of one comparable, see Estate of Hall v. Commissioner, 92 T.C.
312 (1989); Estate of Rodgers v. Commissioner, T.C. Memo. 1999-
129; Klukwan, Inc. v. Commissioner, T.C. Memo. 1994-402; Crowley
v. Commissioner, T.C. Memo. 1990-636, affd. on other grounds 962
F.2d 1077 (1st Cir. 1992); Higgins v. Commissioner, T.C. Memo.
1990-103; Dennis v. United States, 70 AFTR 2d 92-5946, 92-5949,
92-2 USTC par. 50,498 (E.D. Va. 1992), unless it is compelling,
see also 885 Inv. Co. v. Commissioner, 95 T.C. 156, 167-168
(1990); Estate of Fawcett v. Commissioner, 64 T.C. 889, 899-900
(1975); Clark v. Commissioner, T.C. Memo. 1978-402. The
comparability is not compelling here. First, the value of the
partnership’s interest in the two bond funds was about $1.1
million; the value of the assets in the Nuveen Municipal Value
Fund was nearly $1.9 billion. Second, 51 percent of the
partnership assets were invested in two tax-exempt municipal bond
funds; the Nuveen Municipal Value Fund held no real property.
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