regarding the sale of limited partnership interests during the 60-day period ended May 31, 1994. The estate argues that Burns' conclusion, which is based on data found in the May/June 1995 issue, is flawed because such information was not available on January 1, 1995, the date the gift was made. The estate contends that, since a gift of property is valued, pursuant to section 2512(a), as of the date of the transfer, posttransfer data cannot affect our decision. However, Burns does not use the posttransfer data to prove directly the value of the transferred interests. Instead, he uses the May/June 1995 issue to show what value would have been calculated if, on January 1, 1995, decedent had looked at transactions involving the sale of interests in similarly situated partnerships occurring at that point in time. Data regarding such transactions involving similarly situated partnerships were available on the valuation date. Therefore, the data available in the May/June 1995 issue are relevant as they provide insight into what information would have been found if, on January 1, 1995, decedent had looked at transactions occurring on or near the valuation date. The data on which Burns relied show that interests in similarly situated partnerships were trading at a 38-percent discount from April 2 to May 31, 1995. The data on which Elliott relied show that interests in similarly situated partnerships were trading at a 45-percent discount from April 2 to May 31, 1994. Therefore, transfers of interests on or around January 1, 1995, would have been trading at a discount somewhere between 38 and 45 percent. Because the data on which Burns relied are closer in time to the transfer date of the 16.915-percent AVLP interests, we give greater weight to his determination. Recognizing that the valuation process is always imprecise, a 40-percent discount is reasonable. This discount is a reduction in value for an interest trading on the secondary market and encompasses discounts for lack of control and lack of marketability. Elliott opines that an additional 20-percent discount for lack of marketability is applicable because the partnerships that are the subject of the data in the publication are syndicated limited partnerships. He believes that, although there is a viable market for syndicated limited partnership interests, a market for nonsyndicated, family limited partnership interests does not exist. The additional 20-percent dis count opined by Elliot is also attributable to sections 8.4 and 8.5 of the AVLP agreement, which attempt to limit the transferability of interests in AVLP. In calculating the additional discount, Elliott relied on data found in various restricted stock and initial public offering studies. Elliott acknowledges that the secondary market for syndicated partnerships is not a strong market and that a large discount for lack of marketability is already built into the secondary market discount. Although Elliott adjusts his analysis of the data found in the restricted stock and initial public offering studies to take into consideration the lack-ofmarketability discount already allowed, his adjustment is inadequate. His cumulation of discounts does not survive a sanity check. Sections 8.4 and 8.5 of the AVLP agreement do not justify an additional 20-percent discount. An option of the partnership or the other partners to purchase an interest for fair market value before it is transferred to a third party, standing alone, would not significantly reduce the value of the partnership interest. Nevertheless, the right of the partnership to elect to pay the purchase price in 10 annual installments with interest set at the minimum rate allowed by the rules and regulations of the Internal Revenue Service would increase the discount for lack of marketability. Texas courts have been willing to disregard option clauses that unreasonably restrain alienation. See Procter v. Foxmeyer Drug Co., 884 S.W.2d 853, 859 (Tex. App. 1994). We express no opinion whether this election is enforceable under Texas law. Because this clause would cause uncertainty as to the rights of an owner to receive fair market value for an interest in AVLP, a hypothetical buyer would pay less for the partnership interest. See Estate of Newhouse v. Commissioner, 94 T.C. 193, 232-233 (1990); Estate of Moore v. Commissioner, T.C. Memo. 1991-546. We believe that an additional discount equal to 8 percent for lack of marketability, to the NAV previously discounted by 40 percent, is justified. For the reasons set forth in the built-in capital gains analysis for JBLP, an additional discount for lack of marketability due to built-in gains in AVLP is not justified. Although the owner of the percentage interests to be valued with respect to AVLP would not exercise effective control, there is no reason why a section 754 election would not be made. Elliott admits that, because AVLP has relatively few assets, a section 754 election would not cause any detriment or hardship to the partnership or the other partners. Thus, we agree with Burns that the hypothetical seller and buyer would negotiate with the understanding that an election would be made. Elliott's assumption that Elizabeth Jones and Susan Jones Miller, as general partners, might refuse to cooperate with a third-party purchaser is disregarded as an attempt to bootstrap the facts to justify a discount that is not reasonable under the circumstances. Therefore, a further discount for built-in capital gains is not appropriate in this case. D. Conclusion The schedules below summarize our conclusions as to fair market value for the transferred JBLP and AVLP limited partnership interests: We have considered all remaining arguments made by both parties for a result contrary to those expressed herein, and, to the extent not discussed above, they are irrelevant or without merit. To reflect the foregoing, Decision will be entered under Rule 155. ESTATE OF PAUL C. GRIBAUSKAS, DECEASED, ROY L. Docket No. 3107-98. Filed March 8, 2001. In late 1992, D and his former spouse won a Connecticut LOTTO prize payable in 20 annual installments. At the time of his death in 1994, D was entitled to receive 18 further annual payments of $395,182.67 each. Held, the lottery payments must be included in D's gross estate and valued for estate tax purposes through application of the actuarial tables prescribed under sec. 7520, I.R.C. Michael J. Kopsick and William J. Dakin, for petitioner. Carmino J. Santaniello, for respondent. OPINION NIMS, Judge: Respondent determined a Federal estate tax deficiency in the amount of $403,167 for the Estate of Paul C. Gribauskas (the estate). The sole issue for decision is whether an interest held at his death by Paul C. Gribauskas (decedent) in 18 annual installments of a lottery prize must be valued for estate tax purposes through application of the actuarial tables prescribed under section 7520. Unless otherwise indicated, all section references are to sections of the Internal Revenue Code in effect as of the date of decedent's death, and all Rule references are to the Tax Court Rules of Practice and Procedure. Background This case was submitted fully stipulated pursuant to Rule 122, and the facts are so found. The stipulations of the parties, with accompanying exhibits, are incorporated herein by this reference. Decedent was a resident of West Simsbury, Connecticut, when he died intestate in that State on June 4, 1994. His estate has since been administered by the probate court for the District of Simsbury. Roy L. Gribauskas and Carol Beauparlant, decedent's siblings, are named coexecutors of his estate. At the time the petition in this case was filed, Roy Gribauskas resided in Southington, Connecticut, and Carol Beauparlant resided in Berlin, Connecticut. The Connecticut LOTTO In September of 1983, the State of Connecticut (the State) commenced running a biweekly "LOTTO" drawing. During all relevant periods, this lottery was administered by the State of Connecticut Revenue Services, Division of Special Revenue (the division), in accordance with regulations promulgated to govern the game's operation. Individuals participate in the lottery by purchasing for $1 a ticket on which they select six numbers. If the six numbers so chosen match those randomly selected at the next LOTTO drawing, the ticketholder becomes entitled to a prize of $1 million minimum, with a potentially greater award available if ticket purchases have increased the size of the jackpot. LOTTO prizes in excess of $1 million are paid in 20 equal annual installments, each made by means of a check from the State payable to the prizewinner and drawn on funds in the custody of the State treasurer. Winners are not entitled to elect payment in the form of a lump sum. As in effect during the year of decedent's death, the following administrative regulations prohibited a LOTTO prizewinner from assigning or accelerating payment of the installments: (d) Prizes non-assignable. A prize to which a purchaser may become entitled shall not be assignable. (e) Payments not accelerated. Under no circumstances, including the death of a prize winner, shall installment payments of prize money be accelerated. In all cases such payments shall continue as specified in the official procedures. The division shall make such payments payable to the fiduciary of the decedent prize winners' [sic] estate upon receipt of an appropriate probate court order appointing such fiduciary. The division shall be relieved of any further responsibility or liability upon payment of such installment prize payments to the fiduciary of the estate of a deceased installment prize winner or the heirs or beneficiaries thereof named in an appropriate probate court order. [Conn. Agencies Regs. sec. 12-568-5(d) and (e) (1993).] The division was authorized to, and did, fund its LOTTO obligations through the periodic purchase of commercial |