Estate of W.W. Jones II, Deceased, A.C. Jones IV, Independent Executor - Page 33




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          1994).  We express no opinion whether this election is                      
          enforceable under Texas law.  Because this clause would cause               
          uncertainty as to the rights of an owner to receive fair market             
          value for an interest in AVLP, a hypothetical buyer would pay               
          less for the partnership interest.  See Estate of Newhouse v.               
          Commissioner, 94 T.C. 193, 232-233 (1990); Estate of Moore v.               
          Commissioner, T.C. Memo. 1991-546.  We believe that an additional           
          discount equal to 8 percent for lack of marketability, to the NAV           
          previously discounted by 40 percent, is justified.                          
               For the reasons set forth in the built-in capital gains                
          analysis for JBLP, an additional discount for lack of                       
          marketability due to built-in gains in AVLP is not justified.               
          Although the owner of the percentage interests to be valued with            
          respect to AVLP would not exercise effective control, there is no           
          reason why a section 754 election would not be made.  Elliott               
          admits that, because AVLP has relatively few assets, a section              
          754 election would not cause any detriment or hardship to the               
          partnership or the other partners.  Thus, we agree with Burns               
          that the hypothetical seller and buyer would negotiate with the             
          understanding that an election would be made.  Elliott’s                    
          assumption that Elizabeth Jones and Susan Jones Miller, as                  
          general partners, might refuse to cooperate with a third-party              
          purchaser is disregarded as an attempt to bootstrap the facts to            
          justify a discount that is not reasonable under the                         





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