- 27 -
District Court determined that the cases involving closely held
corporate stock were “inapplicable to the instant dispute” and
that “the specific issue before the Court appears to be one of
first impression”. Estate of Smith v. United States, 300 F.
Supp. 2d 474, 477 (S.D. Tex. 2004), affd. 391 F.3d 621 (5th Cir.
2004). The estate argued that the retirement accounts were more
than simply a collection of the assets contained within them and
that due consideration must be paid to the accounts themselves.
The District Court rejected this argument, concluding that “the
accounts are equivalent to the assets contained within them * * *
[and] The potential tax to be incurred by the seller, while
significant to the seller, would not affect that sales price of
the securities and would not factor into negotiations between the
hypothetical buyer and seller.” Id. at 478 (emphasis added).
The District Court observed that while there is a market for
publicly traded securities such as those contained in the
retirement accounts, there is no market for retirement accounts
themselves.11 Therefore, the court concluded that “it is not
11Although on the trial court level the estate pointed out
the fact that there was no market for the retirement accounts,
the estate did not go as far to argue that a lack of
marketability discount should be applied. On appeal, the estate
argued for the lack of marketability discount but the Court of
Appeals refused to consider the argument because the estate
raised it for the first time on appeal. See Estate of Smith v.
United States, 391 F.3d 621, 625-626 (5th Cir. 2004). We have
set forth our reasons for finding that a lack of marketability
discount is unwarranted in supra sec. II.
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011