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also believe that the ROFR would reduce value, but disagree both
as to rationale and quantum. We are satisfied that some amount
of discount is attributable to the ROFR and that 10 percent is an
appropriate discount for both the ROFR and the purchaser’s
minority status, given Dr. Spiro’s addition of a 10-percent
discount for only Korbel’s status as an S corporation.
(4) AVG’s Discounts From the Value of Nonoperating
Assets
Dr. Bajaj applied an overall 35-percent marketability
discount to his total valuation of Korbel, which included
nonoperating assets. Dr. Spiro applied a 25-percent liquidity
discount to his valuation of Korbel, not including nonoperating
assets. As noted supra p. 37, he then applied separate
additional discounts to what he considered nonoperating assets.
We reject Dr. Spiro’s 25-percent minority discount applied to
“excess cash” on the basis of our finding that Korbel retained no
excess cash as of the valuation date. We also reject Dr. Spiro’s
43.75-percent combination minority/liquidity discount applied by
him to the excess land in favor of Dr. Bajaj’s 35-percent overall
discount applied to his total valuation of Korbel, including such
excess land. We see no reason to limit a minority discount to
particular assets of Korbel even if they are nonoperating assets
and, therefore, more readily available for distribution to
shareholders than are Korbel’s operating assets. As we observed
in Estate of Fleming v. Commissioner, T.C. Memo. 1997-484, a
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