- 195 -
student note published near the time of the transactions at issue
in these cases, which found 10-percent discounts to be the
starting point for minority discounts that had been upheld by
courts. See DenHollander, Note, “Minority Interest Discounts and
the Effect of the Section 2704 Regulations”, 45 Tax Law. 877
(1992).
Respondent also argues that the 38.47-percent interest owned
by Dave True at his death is not entitled to a minority discount,
because it represents a significant ownership block that had
swing vote potential. Respondent argues, on the ground that Dave
True held the largest single block of voting rights in True Oil,
that his block could be combined with any other single block to
control the company, even though he did not own a stand-alone
controlling interest. Accordingly, respondent contends that no
minority discount should be allowed in valuing Dave True’s
interest in True Oil as of June 4, 1994.
In summary, respondent computed marketable minority values
for the True Oil interests transferred as of January 1, 1993, and
June 30, 1994, of $35,685,000 and $30,780,000, respectively.
63(...continued)
marketability discounts of 20 percent for transfers of interests
in True Oil by Dave True and Jean True as of Jan. 1, 1993, and
June 30, 1994, respectively, and for the transfer of Jean True’s
interest in Belle Fourche as of June 30, 1994. We interpret
respondent’s statements to mean that separate minority and
marketability discounts of 10 percent each should apply.
Page: Previous 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 NextLast modified: May 25, 2011