Estate of Webster E. Kelley, Deceased, John R. Louden and Patricia L. Louden, Personal Representatives - Page 10

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                    2.  Determination of the Minority Interest Discount               
               Each expert witness determined a minority interest discount            
          or discount for lack of control by reference to general equity              
          closed-end funds.  In a closed-end fund, the assets are brought             
          together for professional management, and the shareholders have             
          no control over the underlying assets.  The owner of an interest            
          does not have the ability to sell the underlying assets.  The               
          closed-end funds typically trade at a discount relative to their            
          share of the NAV, and as the shares enjoy a high degree of                  
          marketability, the discounts must be attributable to some extent            
          to a minority shareholder’s lack of control over the investment             
          fund.  Peracchio v. Commissioner, T.C. Memo. 2003-280.                      
          Therefore, it is appropriate to compare the ownership of a                  
          partnership interest in KLLP to the ownership of a closed-end               
          fund and apply an appropriate discount for lack of control.                 
               Both experts divided the comparable closed-end funds into              
          quartiles by price to NAV ratios.  The first quartile represents            
          the funds that are in high demand and therefore trade at premiums           
          or low discounts.  The fourth quartile represents the funds that            
          are in low demand and trade at higher discounts.                            
                         a.  The Estate’s Expert                                      
               In computing the minority discount, ATI determined that KLLP           
          would be most comparable to the closed-end funds in the fourth              
          quartile with price to NAV discounts of 21.8 percent to 25.5                






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