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investment company as the assessment and monitoring costs would
be relatively low in the case of a sale of an interest in that
company. Id. at 394; Lappo v. Commissioner, supra. KLLP is an
investment company as 100 percent of its assets consist of cash
and certificates of deposit. See McCord v. Commissioner, supra.
a. The Estate’s Expert
In determining the marketability discount, ATI used the
restricted stock approach by drawing an analogy between
partnership interests in KLLP and the common stock of a private,
closely held corporation. In doing so, ATI considered several
restricted stock studies and their findings.
ATI also listed as barriers to marketability of a limited
partnership interest in KLLP the following: (1) Once admitted as
a limited partner, one must continue as a limited partner until
all partners unanimously consent to the admission of a substitute
limited partner and to the withdrawal of the transferring
partner, and the limited partner must execute legal documents as
required by the general partner, who must receive and approve the
documents in writing; (2) a limited partner can assign, transfer,
encumber, or pledge all or part of his partnership interest only
if such assignment is fully executed by assignor and assignee,
such assignment is received by the partnership and recorded on
the books, and the transfer is approved by unanimous vote of all
the partners; (3) no partner has a property right in any of the
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