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retained for 10 years. Applying the hypothetical buyer and
seller test, the Court, based on the record presented, including
the testimony of experts for both parties, concluded that a
discount for tax on built-in gains would be applied.
In the cases in which the discount was allowed, there was no
readily available means by which the tax on built-in gains would
be avoided. By contrast, disregarding the bootstrapping
testimony of A.C. Jones in this case, the only situation
identified in the record where a section 754 election would not
be made by a partnership is an example by Elliott of a publicly
syndicated partnership with “lots of partners * * * and a lot of
assets” where the administrative burden would be great if an
election were made. We do not believe that this scenario has
application to the facts regarding the partnerships in issue in
this case. We are persuaded that, in this case, the buyer and
seller of the partnership interest would negotiate with the
understanding that an election would be made and the price agreed
upon would not reflect a discount for built-in gains.
C. Value of Interests in AVLP
The estate relies on the conclusions of Elliott, who opined
that the value of each transferred interest in AVLP is subject to
a secondary market discount of 45 percent, a discount for lack of
marketability equal to 20 percent, and an additional discount for
built-in capital gains. Burns opined that the transferred
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