Estate of H.A. True, Jr. - Page 161




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              In Estate of Jameson v. Commissioner, T.C. Memo. 1999-43, 77            
          T.C.M. (CCH) 1383, 1397, 1999 T.C.M. (RIA) par. 99,043, at 269-             
          99, we noted that the terms marketability and illiquidity are               
          closely related but are not interchangeable.  Liquidity is a                
          measure of the time required to convert an asset into cash and              
          may be influenced by marketability.  On the other hand,                     
          marketability is not a temporal measure--it is a measure of the             
          probability of selling goods at specified terms, based on two               
          variables:  Demand for the asset and existence of an established            
          market for buyers and sellers of that asset type.  See id.  Thus,           
          if the interest being valued had the power to liquidate the                 
          corporation, then demand for the corporation’s assets (rather               
          than its stock) and existence of a market for such assets are               
          most relevant to our analysis of marketability.  See id.                    
              In the cases at hand, Dave True’s 68.47-percent interest                
          could control liquidation of Belle Fourche; therefore, we must              
          examine the marketability of Belle Fourche’s pipeline assets.               
          Petitioners did not address directly the demand for pipeline                
          assets in the region during the relevant period.  However, based            
          on Mr. Gustavson’s conservative projections, a buyer could expect           
          the Belle Fourche pipeline to continue to generate cash-flow for            
          another 15 years.  Moreover, the stiff competition in the region            
          suggests that larger pipeline owners might consider buying out              
          smaller pipeline operations rather than building new lines.  This           







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