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Petitioner challenges respondent’s partition cost approach.
Petitioner contends that the three properties could not be
partitioned, claiming that decedent and her husband, later
represented by the Trust, waived any right to partition the
properties held jointly by reason of oral and written contracts.
If no partition is available, petitioner maintains that Thomson’s
discount methodology based on partitioning costs is pertinent
only as one of the factors of the loss of control discount.
Petitioner’s argument must fail because the Trust and
decedent’s trust each provide the trustee with the power to
partition the property. The importance of partitioning costs is
dependent on the circumstances of each case. Partition is a more
viable approach where real property is unimproved. Where
significant income-producing improvements are involved, partition
is a less plausible approach. Respondent’s use of partition cost
alone does not give adequate weight to other reasons for
discounting a fractional interest in this case such as the
significance of the control factor and the historic difficulty of
selling an undivided fractional interest in improved real
property. See Williams v. Commissioner, T.C. Memo. 1998-59.
Petitioner contends that the discount applied to decedent’s
50-percent interests should be greater than just the cost to
partition. Hulberg, petitioner’s primary expert, estimated the
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