Estate of Webster E. Kelley, Deceased, John R. Louden and Patricia L. Louden, Personal Representatives - Page 12

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          used a 25-percent minority discount for valuing the interests in            
          KLLP.                                                                       
                         b.  Respondent’s Expert                                      
               Dr. Widmer calculated a minority discount of 12 percent by             
          calculating an arithmetic mean of the entire data set for closed-           
          end funds, not only the fourth quartile.  Dr. Widmer determined             
          that it is essential to use the whole array of closed-end funds             
          as this calculation will remove the marketability element in the            
          discounts or premiums.                                                      
                    3.  Conclusion                                                    
               We are not persuaded that ATI’s exclusive use of the fourth            
          quartile of closed-end funds is proper.  “While we have utilized            
          small samples in other valuation contexts, we have also                     
          recognized the basic premise that ‘[a]s similarity to the company           
          to be valued decreases, the number of required comparables                  
          increases’.”  McCord v. Commissioner, 120 T.C. 358, 384 (2003)              
          (quoting Estate of Heck v. Commissioner, T.C. Memo. 2002-34); see           
          also Lappo v. Commissioner, T.C. Memo. 2003-258.  We are also not           
          persuaded by ATI’s analyses of PPI’s studies regarding minority             
          discounts as ATI admits that these discounts contain some element           
          of discount for lack of marketability, and therefore these                  
          studies result in an overstatement of the minority discount.                
               In determining the minority discount for KLLP, we believe a            
          correct analysis would be to take the arithmetic mean of all of             






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