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the closed-end funds, as shareholders in all closed-end funds
lack control. In using only the fourth quartile, ATI combined
elements of the lack of marketability discount with the minority
discount because the funds in the fourth quartile had the lowest
demand and therefore the highest marketability discount. As the
lack of marketability will be dealt with in the discount for lack
of marketability, see infra, we agree with respondent that ATI’s
discount for lack of control is too high and that it was
incorrect to use solely the fourth quartile funds.
Although we find neither expert particularly persuasive on
this issue, we will apply a 12-percent discount on the grounds
that (1) respondent has effectively conceded that a discount
factor of up to 12 percent would be appropriate, and (2)
petitioner has failed to prove that a figure greater than 12
percent would be appropriate. See Peracchio v. Commissioner,
supra (using a 2-percent minority discount factor for the “cash
and money market funds” asset category of a family limited
partnership).
D. Marketability Discount
1. Introduction
A discount for lack of marketability is appropriate in
valuing the interests in KLLP as there is not a ready market for
partnership interests in a closely held partnership. Estate of
Newhouse v. Commissioner, 94 T.C. at 249. Although both experts
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