Legal Memorandum: IRS's Discretion to Set Minimum Minority Discount

Issue: What tax cases address the limits of the IRS’s discretion to set the minimum minority discount?

Peracchi v. Commissioner, T.C. Memo 2003-280 (Limited Partnership- 6% minority interest discount and 25% marketability discount).

Pierre v. Commissioner, T.C. Memo 2010-106 (LLC- 8% lack of control discount and 30% marketability discount).

Kelly v. Commissioner, T.C. Memo 2005-235 (Limited Partnership-12% minority discount, and 20% marketability discount).

Temple v U.S., 423 F. Supp. 2d 605 (E.D. Tex. 2006) (Limited Partnership – discounts ranging from 3.3% to 60%).

Holman v. Commissioner, 130 T.C. 170 (2008) (Limited Partnership- 4.63%-14.34% minority discounts, and marketability discount 12.5%), rev’d in part, 601 F.3d 763 (8^th Cir. 2010).

McCord v. Commissioner, 120 T.C. 358 (2003), rev’d, 461 F.3d 614 (2006).

Knight v. Commissioner, 115 T.C. 506 (2000) (Limited Partnership – 15% discount for minority interest and lack of marketability).

Lappo v. Commissioner, T.C. Memo 2003-258 (Limited Partnership – 8.5% to 19% minority discount and 24% discount for lack of marketability).

Astleford v. Commissioner, T.C. Memo 2008-128 (Limited Partnership – 17% lack of control and 22% marketability discounts).

Godley v. Commissioner, 286 F.3d 210 (4^th Cir. 2002) (Partnership – 0% minority discount).

Keller v. U.S., 2009-2 USTC ¶ 60,579 (S.D. Tex. 2009), aff’d, 697 F.3d 238 (5th Cir. 2012).

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