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manage the 16 parcels, and it has been shown that his management
was poor. These are facts that were available to and would
certainly influence a knowledgeable buyer and should be factored
into the discount percentage.
The Possibility of Partition--Effect on Value
The estates argue that the use of partition, as a legal
matter, is fraught with uncertainty. Relying on their experts,
petitioners contend that partition of the properties in question
would be protracted, thus increasing the discount on the
fractional interests in issue. Respondent disagrees with
petitioners and contends that the properties could be relatively
easily partitioned in 3 or 4 months if partition were
uncontested.
Generally, the “Potential costs and fees associated with
partition or other legal controversies among owners, along with a
limited market for fractional interests and lack of control, are
all considerations rationally related to the value of an asset.”
Estate of Bonner v. United States, 84 F.3d 196, 197-198 (5th Cir.
1996). Accordingly, the cost of partition does not set some
absolute limit on the amount of discount. Instead, it is a
factor to be considered.
Each party has attempted to either maximize or minimize the
effect that partition may have upon the discount attributable to
a fractional interest in timberland. There is no way to
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