Until 1989, the Tax Court had rejected co-ownership or “fractionalization” discounts to real property values1 although interests in real estate held as community property had been eligible for discount for non-marketability of the decedent’s fractional interest.2 However, a 1989 case, Estate of Youle v. Commissioner,3 allowed a discount of 12 ½ percent for tenancy in common ownership. That case has been followed by about 20 cases allowing discounts of 10 to 60 percent.4 For real property other than timberland, a discount of 20 percent has been considered as relatively safe.5



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