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A person who maintains control over the ultimate disposition
of property is, in practical effect, in a position similar to the
actual owner of the property. See, e.g., Estate of Kurz v.
Commissioner, 101 T.C. 44, 50-51, 59-60 (1993), supplemented by
T.C. Memo. 1994-221, affd. 68 F.3d 1027 (7th Cir. 1995). The
Court should not allow a taxpayer who is not in fact limited by
an agreement to claim a discount that is premised on that very
limitation. A minority discount is allowed because a limited
partner cannot cause the partnership to make distributions.
Decedent and decedent's estate in fact caused the partnership to
make distributions at will. The minority discount is not
appropriate in this case.
Additionally, a discount for lack of marketability is
allowed because a hypothetical third party would pay less for the
partnership interest than for the assets. But in this case,
under the actual partnership arrangement, decedent could have had
all the assets distributed to himself and then sold them directly
to the buyer. The lack of marketability discount, therefore,
also is inappropriate in this case. Because the actual
partnership arrangement provided for distributions at will, I
would value the partnership interest at the value of the
partnership's assets without any discount.
For the above reasons, I respectfully dissent.
BEGHE and MARVEL, JJ., agree with this dissenting opinion.
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