- 26 -
weight must be given to the net asset value of the
partnership’s underlying assets even though a hypothetical
buyer of the subject limited partnership interest would
have no ability to directly realize the value by forcing
liquidation. See id. at 945.
Second, we agree with petitioner’s expert that for
purposes of computing the fair market value of the subject
limited partnership interest under the capitalization of
income approach, it is appropriate to use the average of
the distributions made during the years 1990 through 1992,
rather than the amount of the 1992 distribution. As
mentioned above, paragraph 4.1 of the partnership agreement
grants the general partner sole discretion to determine
when distributions are made. While there is no guaranty
that past distributions will reflect the distributions to
be made in the future, we believe that an average of the
distributions over 3 years better reflects the cash
distributions that an investor could reasonably anticipate
in the future, than the distributions made during 1992 of
$800,000, an amount that exceeds the 3-year average by
$116,667. We do not agree with respondent’s position that
an investor would consider the 1992 distributions of
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011