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v. Commissioner, 325 F.2d 934, 938 (8th Cir. 1963), affg. T.C.
Memo. 1961-347; Estate of Andrews v. Commissioner, 79 T.C. 938
(1982). Reviewing the facts of this case, at the date of death,
decedent owned a 99-percent limited partnership interest in SFLP
and a 47-percent interest in Stranco, the 1-percent owner and
general partner of SFLP. Approximately 75 percent of the
partnership’s value consisted of cash and securities. It is
unlikely and plainly contrary to the interests of a hypothetical
seller to sell these interests separately and without regard to
the liquidity of the underlying assets. SFLP was not a risky
business or one in which the continuing value of the assets
depended on continuing operations.
Each of the parties in this case presented expert valuation
testimony. The experts agreed that the appropriate methodology
was the “net asset value” approach. Each expert determined and
applied a minority interest discount and a marketability discount
to the net asset value of the partnership assets.
Both petitioner’s expert and respondent’s expert determined
that a 25-percent lack of marketability discount was appropriate.
Only respondent’s expert, however, considered decedent’s
ownership of Stranco stock. We agree with respondent that the
relationship between the limited partnership interest and the
interest in Stranco cannot be disregarded. The entities were
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