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not be interested in control. Because there are no restrictions
on the transferability of CCC shares, that factor would favor a
lower-than-average discount.
The holding period for CCC stock would favor a higher-than-
average discount because, absent a sale, some of the trusts
holding shares cannot terminate in less than 20 years. In
addition, because gain from the investment relies more heavily on
long-term appreciation, that would also extend the necessary
holding period to realize the investor’s goals in such an
investment. CCC has no redemption policy, although the board
indicated that it would consider redeeming an individual
shareholder’s shares. Accordingly, it is uncertain whether
redemption will occur, and the existence of such uncertainty
warrants a somewhat higher than average discount. There is no
reason to consider “the costs of going public” in the
circumstances of this case.
Accordingly, the factors outlined in Mandelbaum v.
Commissioner, supra, overall, favor a lower-than-average discount
for lack of marketability. We hold that 15 percent is an
appropriate discount for lack of marketability. This discount,
coupled with the 10-percent discount for lack of control produces
a 23.5-percent discount (1-(1-.10)(1-.15)).16 Accordingly, we
16 As already noted, the discounts reflected for the funds
Mr. Frazier found to be comparable in his closed-end fund study
may have reflected more than a lack of control discount.
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