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may decide the fair market value of such interests by looking at
the particular company’s net worth, prospective earning power,
dividend-paying capacity, and other relevant factors. See Estate
of Klauss v. Commissioner, T.C. Memo. 2000-191; sec. 25.2512-
2(f)(2), Gift Tax Regs. Such other relevant factors include the
company’s goodwill and management, the company’s position in the
industry, the economic outlook in the particular industry, the
degree of control in the company represented by the shares
subject to valuation, and the available values of securities in
companies engaged in a similar business. See id.
In the instant cases, as in most cases involving valuation
disputes, the parties primarily relied on opinions by experts to
establish the value of the transferred blocks of stock.
Petitioners presented the appraisal report of Gary L. Wahlgren
(Mr. Wahlgren) to establish the prediscount value of the stock in
the Company and the amount of discounts for lack of control
(minority interest) and lack of marketability. Respondent relies
on an appraisal report prepared by Phillip J. Schneider (Mr.
Schneider).
The discount for a minority interest accounts for the
inability of a shareholder to control or influence decisions in a
closely held corporation. See Ward v. Commissioner, 87 T.C. 78,
106 (1986); Estate of Stevens v. Commissioner, T.C. Memo. 2000-
53. The discount for lack of marketability, on the other hand,
is used to compensate for the fact that there is no ready market
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