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Memo. 1989-231, in arguing that Joseph’s shares have “swing vote
characteristics” because when combined with the shares of a
hypothetical shareholder in the position of Cyril, that person
would have majority voting control. The estate’s reliance on
Estate of Winkler v. Commissioner, supra, is misplaced. In that
case, there were three shareholders with stock interests of 50
percent, 40 percent, and 10 percent, respectively. The main
issue for decision was whether a minority discount applied for
estate tax purposes of valuing the 10-percent interest. We held
that the 10-percent interest possessed “swing vote
characteristics” because a hypothetical buyer would be able to
combine with one of the two remaining shareholders to either
effect or block control of the company. We based our analysis on
a hypothetical buyer, not one holding either the 40-percent or
50-percent interest. We concluded that the no minority discount
should apply to the 10-percent interest. The instant case is
distinguishable from Estate of Winkler v. Commissioner, supra.
Cyril held 33.73 percent and Joseph held 28.26 percent of the
voting stock of JM; collectively their shares represented 61.99
percent of the voting power. The evidence in the record does not
establish the share ownership of the remainder of the stock of
JM. It has not been established that a hypothetical buyer would
be able to combine with another shareholder to effectuate
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