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We shall first address the minority discount. A minority
discount is appropriate if the block of stock does not enjoy the
variety of rights associated with control. Estate of Andrews v.
Commissioner, supra at 953; Estate of Murphy v. Commissioner,
supra (citing Estate of Chenoweth v. Commissioner, 88 T.C. 1577,
1582 (1987)). Control means that, because of the interest owned,
the shareholder can unilaterally direct corporate action, select
management, decide the amount of distribution, rearrange the
corporation’s capital structure, and decide whether to liquidate,
merge, or sell assets. Estate of Newhouse v. Commissioner, 94
T.C. 193, 251 (1990). Respondent’s experts testified about the
difficulties a 45-percent shareholder would face in changing
Sealodge’s corporate policies in view of its bylaws. However,
respondent’s experts also pointed out the fact that petitioners’
interest in Sealodge had “swing vote” attributes and could be
joined with any of the two remaining blocks of stock to exercise
control in the corporation. We shall take these factors into
consideration.
Petitioners argue that since MRDF ultimately received
control of the stock in Sealodge, no discount is warranted.
Section 25.2511-1(a), Gift Tax Regs., explains that the gift tax
is an excise tax on the transfer and is not a tax on the subject
of the gift. Sec. 25.2511-2(a), Gift Tax Regs. Section
25.2511-2(a), Gift Tax Regs., provides:
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