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from a restriction on transferability; and that while sales
cannot take place in the public market, they can in the private
market. Mr. Frazier’s analysis was based on publicly traded
securities with restrictions on resale to which the quotation
from the revenue ruling referred. However, because CCC was a
closely held company with no restrictions on transfer, investors
would not be “locked” into this investment. Despite those
important distinctions, restricted stock resales provide a
limited amount of guidance on the question of lack of
marketability. In particular, the studies concerned actual
resales of the stock in a private market setting as compared to
the price of publicly traded counterparts. Thus, while there
were restrictions on selling the stock in a market transaction,
there were no restrictions on private transfers.
Respondent contends that the companies examined in the
restricted stock studies are not comparable because many of them
were unprofitable or riskier than CCC. Mr. Frazier studied sales
of stock of a number of companies. He acknowledges that a
significant number of those companies reported a loss prior to
the sale of that company’s stock. Studies that focused on
profitable companies, however, resulted in 22- to almost 35-
percent discounts, whereas the studies of unprofitable companies
which respondent contends are not comparable had lower discounts
ranging from 14 to 25 percent.
Finally and despite the estate’s assertions to the contrary,
respondent contends that there is a market for CCC shares. While
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