Lack of Control and Marketability Discounts for Tiered Partnership Interests

Steve Akers (Bessemer Trust) wrote an analysis of the case of Astleford v. Commissioner. 

Here is his synopsis of the case:

This gift tax case allows lack of control and marketability discounts for tiered partnership interests.  An FLP owned a 50% interest in a real estate general partnership and various other real estate tracts.  An approximate 20% absorption discount was allowed for valuing a 1,187 acre tract in the general partnership.  The FLP’s 50% interest in the general partnership was valued as a partnership interest rather than as an assignee interest.  Even so, a 30% combined discount for lack of control and marketability was allowed for the 50% interest in the general partnership.  An approximate 17% lack of control and 22% lack of marketability discount (for a seriatim discount of about 35%) was allowed for valuing gifts of 90% of the limited partnership interests (three 30% gifts in 1996 and 1997).