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(1973). A knowledgeable buyer or seller would aim to maximize
profit and/or minimize cost in the setting of a hypothetical
sale. See Estate of Watts v. Commissioner, 823 F.2d 483, 486
(11th Cir. 1987), affg. T.C. Memo. 1985-595; Estate of Newhouse
v. Commissioner, 94 T.C. 193, 218 (1990).
For example, a buyer’s knowledge that realty could be easily
partitioned would have an effect on the amount of discount
applied in connection with a partial interest. In such a
situation, discounts, far in excess of the cost to partition, may
not be warranted. Similarly, if partition is not feasible, then
the cost of partition would not have much effect on the amount of
discount that could be attributable to a fractional interest. In
either event, the cost to partition may play some role in the
valuation process. This Court’s decision that a 60-percent
discount was appropriate was based on facts presented at trial
and the testimony of the estates’ expert witness.
Respondent was not confronted with the facts concerning the
difficulties connected with the use of partition in these cases
until receipt of one of the estates’ experts’ reports
approximately 30 days prior to trial. That report had not been
provided to respondent prior to that time. The facts relied upon
by the expert had not been discussed with respondent due to the
lack of a meeting with the estates’ representatives. Those facts
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