- 11 - This does not end our analysis because JUL was owned by Sealodge, and we must determine the value of petitioners’ 45- percent interest. Minority and Lack of Marketability Discounts Minority discounts and discounts for lack of marketability are often discussed together, but they are distinguishable. Estate of Murphy v. Commissioner, T.C. Memo. 1990-472. Shares of corporate stock which represent a minority interest may be worth less than a proportionate share of the value of the assets of the corporation. Id. (citing Harwood v. Commissioner, 82 T.C. 239, 267-268 (1984), affd. without published opinion 786 F.2d 1174 (9th Cir. 1986)); Estate of Andrews v. Commissioner, 79 T.C. 938, 957 (1982); Estate of Zaiger v. Commissioner, 64 T.C. 927, 945-946 (1975). In Estate of Andrews v. Commissioner, supra at 953, we noted the distinction between a minority discount and lack of marketability discount: The minority shareholder discount is designed to reflect the decreased value of shares that do not convey control of a closely held corporation. The lack of marketability discount, on the other hand, is designed to reflect the fact that there is no ready market for shares in a closely held corporation. Although there may be some overlap between these two discounts in that lack of control may reduce marketability, it should be borne in mind that even controlling shares in a nonpublic corporation suffer from lack of marketability because of the absence of a ready private placement market and the fact that flotation costs would have to be incurred if the corporation were to publicly offer its stock. * * *Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
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