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this record, we believe some discount is appropriate based on an
analogy to a closed-end fund.
Conklin cited seven studies of sales of restricted stocks
from 1969 to 1984 to support his estimate that a 30-percent
discount for lack of marketability applies. He used a table
summarizing initial public offerings of common stock from 1985 to
1993. However, he did not show that the companies in the studies
or the table were comparable to the partnership, or explain how
he used this data to estimate the discount for lack of
marketability. See Tripp v. Commissioner, 337 F.2d 432, 434-435
(7th Cir. 1964), affg. T.C. Memo. 1963-244; Rose v. Commissioner,
supra; Chiu v. Commissioner, 84 T.C. 722, 734-735 (1985). He
also listed seven reasons why a discount for lack of
marketability applies, but he did not explain how those reasons
affect the amount of the discount for lack of marketability.
3. Conklin’s Factual Assumptions
Conklin listed 19 purported business reasons for which he
said the partnership was formed. Petitioners claimed to have had
only 5 of those 19 reasons.10 Conklin also said: “The
10 Petitioners’ five reasons are: (a) Centralize control
of family investments; (b) avoid fragmentation of interests; (c)
consolidate family interests into one entity; and protect the
children’s assets (d) from creditors and (e) in the event of a
divorce.
The 14 reasons Conklin gave but petitioners did not are:
(a) Obtain better rates of return; (b) reduce administrative
costs; (c) provide for competent management in case of death or
(continued...)
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