Some appraisers argue that lack of control discounts (LOCD’s) for asset classes held in a pass-through entity (say an FLP) are unique: 2% for cash and equivalents, 5% for bonds, 7% for stocks, and so forth. (The specific numbers are examples only.)
I do not agree with this for three reasons.
In a pass-through entity, all assets are valued at current fair market. What counts is the total income yield (dividends, interest, etc. divided by market value), not how it derives from or is attributable to individual assets.
In a pass-through entity, the LOCD is created from the operating agreement provisions (governing distributions and other factors) and the asset portfolio as a whole, not the characteristics of the individual assets (which are combined as in the preceding point).
If we extended this argument to operating companies, we would have different LOCD’s for different assets, which makes no sense.