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the value of the consideration transferred by Cyril as of October
31, 1951, was approximately $42,000.
B. Valuation Standards
The valuation reports relied on by the experts are
significantly different, both in the application of common
valuation techniques and their assumptions regarding the buyer
and seller of the property interests. The most notable
difference is in the experts’ application of discounts and
premiums. Discounts for lack of marketability and lack of
control are conceptually distinct and are well accepted by the
courts in cases involving the value of stock of closely held
corporations. See Estate of Newhouse v. Commissioner, 94 T.C. at
249. The distinction between the two discounts is succinctly
stated in Estate of Andrews v. Commissioner, 79 T.C. at 953:
The minority shareholder discount is designed to
reflect the decreased value of shares that do not
convey control of a closely held corporation. The lack
of marketability discount, on the other hand, is
designed to reflect the fact that there is no ready
market for shares in a closely held corporation. * * *
While the appropriate amount of discount to apply in each case is
a question of fact, it is unreasonable to argue that no discount
should be applied to a minority interest in a closely held
corporation. See Estate of Newhouse v. Commissioner, supra at
249. However, we have recognized that a discount may not apply
in situations where a minority block of stock has “swing vote
characteristics”. Estate of Winkler v. Commissioner, T.C. Memo.
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