In 2015, Stout’s professionals prepared an appraisal for gift tax purposes of a derivative on a carried interest in a private equity fund with $1 billion in committed capital. Late in 2018, the IRS audited the gift tax return, calling into question certain aspects of the valuation, including the concluded discounts for lack of control and lack of marketability, which exceeded 15% and 45%, respectively. We engaged in discussions with the IRS engineer, defending the conclusions drawn in the appraisal report. In late 2019, the IRS and the client settled the audit with a modest change to the controlling interest value of the derivative, but with no changes to the discounts for lack of control or lack of marketability.