- 25 -
c. Mr. Stryker’s Analysis
In his written report, Mr. Stryker cites a series of
empirical studies known as restricted stock studies,23 which,
according to him, “center around a 30% marketability discount for
transfers of restricted stock.” After analyzing the factors we
reviewed in Mandelbaum v. Commissioner, supra,24 Mr. Stryker
concludes that “a discount of 40% was applicable to the freely
traded value of Peracchio’s interests. (10 percentage points
higher than the private placement studies.)” Thus, Mr. Stryker
derives his quantitative starting point (30 percent) from
restricted stock studies.
While restricted stock studies certainly have some probative
value in the context of marketability discount analysis, see,
e.g., McCord v. Commissioner, 120 T.C. at 390-393, Mr. Stryker
makes no attempt whatsoever to analyze the data from those
studies as they relate to the transferred interests. Rather, he
simply lists the average discounts observed in several such
studies, effectively asking us to accept on faith the premise
23 Restricted stock studies (also referred to by Mr.
Stryker as private placement studies) compare the private-market
price of restricted shares of public companies (i.e., shares
that, because their issuance was not registered with the
Securities and Exchange Commission (SEC), generally cannot be
sold in the public market for a certain period of time without
SEC registration) with the coeval public-market price of such
companies’ unrestricted shares.
24 Mr. Stryker also considers factors discussed in Rev.
Rul. 77-287, 1977-2 C.B. 319, which are generally subsumed within
the Mandelbaum factors.
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