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facts of these cases would have been difficult, protracted, and
expensive.
The Variations Between the Estates’ Reported Values and Those
Maintained for Trial
Finally, we consider the escalation of the discounts claimed
by the estates. John’s estate initially reported a value for the
fractional interest that was discounted by only 25 percent. By
the time Sarah died, the value of her fractional interest was
reported at a value that was discounted by 50 percent. At that
point, John’s estate amended its return and claimed a 50-percent
discount. As these matters were further developed during the
audit examination and controversy, information was discovered
that caused the estates to further reduce the reported value of
the fractional interests by claiming a 60-percent discount.
Finally, the estates’ litigating position, based on Mr. Steele’s
testimony, was that both fractional interests should be
discounted by 90 percent.
Respondent points to the escalation of the discounts and
contends that it merely reflects the estates’ propensity to take
aggressive and excessive positions. Respondent contends that the
discount initially claimed by John’s estate was closer to the
correct amount and should represent the maximum amount to which
either estate should be entitled. The estates have shown,
however, that the discounts initially claimed did not take into
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