Opinion by Judge THOMPSON; Dissent by Judge NOONAN.
DAVID R. THOMPSON, Circuit Judge;The taxpayer Pope & Talbot, Inc. (“Pope & Talbot”) appeals the tax court’s decision under 26 U.S.C. § 311(d)(1) determining the gain Pope & Talbot was required to recognize when it distributed appreciated property to a limited partnership, which in turn distributed limited partnership interests to the Pope & Talbot shareholders. The tax court calculated the fair market value of the distributed property by determining what a willing buyer would have paid a willing seller in a hypothetical sale of the property on the date of distribution.
Pope & Talbot contends the tax court should have determined the fair market value of the distributed property by aggregating the market value of the limited partnership interests the shareholders received. We have jurisdiction under 26 U.S.C. § 7482, and we affirm.
I
BACKGROUND
Pope & Talbot is a publicly held Delaware corporation. Its shares are traded on the New York Stock Exchange. During 1985, Pope & Talbot’s Board of Directors and shareholders approved a “Plan of Distribution” (“the Plan”) to transfer 71,363 acres of its timberlands, timber, land development, and resort businesses in the State of Washington (together, “the Washington Properties”) to Pope Resources, a newly formed Delaware limited partnership (“the Partnership”). Although Pope & Talbot was not to become a partner in the Partnership, the Plan included the formation of two new Delaware corporations-Pope MGP, Inc. and Pope EGP, Inc.-to serve, respectively, as the managing general partner and the standby general partner. Both of these new corporations were owned initially by two principal shareholders of Pope & Talbot, who were to have exclusive authority for managing the Partnership. The Plan required that when Pope & Talbot transferred the Washington Properties to the Partnership, the Partnership would issue limited partnership interests to Pope MGP, Inc., which in turn would distribute the limited partnership units pro rata to the Pope & Talbot shareholders. The holders of the limited partnership units were to have no management power and only limited voting rights.
The effective date of the distribution was December 20, 1985. On that date Pope & Talbot borrowed $22.5 million from Travelers Insurance Company, secured by the Washington Properties, and then transferred the Washington Properties to the Partnership subject to this liability. Pope & Talbot retained the $22.5 million in loan proceeds. Pope & Talbot also transferred $1.5 million in cash and certain installment notes receivable to the Partnership. The Partnership paid Pope & Talbot $5 million for the installment notes receivable, making this payment with funds it borrowed from an unrelated lender.
The Partnership paid no consideration for the Washington Properties. The limited partnership units in the Partnership were distributed to the approximately 6,000 shareholders of Pope & Talbot, each shareholder receiving one limited partnership unit for every five shares of Pope & Talbot’s common stock.
Two weeks before the effective date of the distribution, approximately 1.2 million limited partnership units of the Partnership began trading on the Pacific Stock Exchange on a “when issued” basis. A “when issued” transaction is a conditional transaction in which the buyer indicates a desire to buy the security when it is authorized for sale. The weighted average trading price of the partnership units between December 6,1985, and *1238January 7, 1996, was approximately $11.50 per unit.
When Pope & Talbot filed its tax returns, it computed the fair market value of the distributed property by using the aggregate value of all the limited partnership units, which individually were valued at $11.50 per unit. The Commissioner disputed this valuation and determined that additional tax was due. Pope & Talbot eventually filed suit in the tax court challenging the Commissioner’s deficiency determination.
The tax court granted the Commissioner’s motion for partial summary judgment, holding that, under 26 U.S.C. § 311(d)(1),1 the appropriate methodology to compute Pope & Talbot’s gain on the distribution of the appreciated Washington Properties was to treat the properties as if they had been sold by Pope & Talbot for their fair market value on the day of distribution and “not by reference to the property interest received by each shareholder.”
A trial then ensued to determine the fan-market value of the Washington Properties, using the methodology determined by the tax court in its partial summary judgment. The tax court reviewed extensive expert witness reports and testimony about the fair market value of each of the Washington Properties. Based on this review, the court determined that the valuation range for the combined Properties was between $46.7 million and $59.7 million. The court then considered the aggregate value of the trading price of the limited partnership units, but only as evidence of the fair market value of the Properties. Concluding that the aggregate value of the units warranted valuation toward the low end of the valuation range, the court found the fair market value of the Washington Properties to be $48.5 million.
In this appeal, Pope & Talbot challenges the methodology by which the tax court valued the distribution of the Washington Properties, as well as the value placed on those properties.
II
ANALYSIS
To determine the correct methodology to be used in calculating the fair market value of appreciated property a corporation distributes to its shareholders, we must interpret 26 U.S.C. § 311(d)(1).
The version of 26 U.S.C. § 311(d)(1) (“section 311(d)(1)”) in effect when this distribution occurred provides:
I. Distributions of Appreciated Property-—
(1) In General. — If—
(A) a corporation distributes property (other than an obligation of such corporation) to a shareholder in a distribution to which subpart A applies, and
(B) the fair market value of such property exceeds its adjusted basis (in the hands of the distributing corporation),
then a gain shall. be recognized to the distributing corporation in an amount equal to such excess as if the property distributed had been sold at the time of distribution.
26 U.S.C. § 311(d)(1) (1984).
Our analysis begins with the language of the statute. When “the statute’s language is plain, ‘the sole function of the courts is to enforce it according to its terms.’ ” Giovanini v. United States, 9 F.3d 783, 785 (9th Cir.1993) (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)).
The statute’s focus is on gain to the corporation. The final clause of the statute provides that a distributing corporation is required to recognize such gain “in an amount equal to [the excess of fair market value over adjusted basis] as if the property distributed had been sold at the time of distribution.” 26 U.S.C. § 311(d)(l)(1984). This clause unambiguously requires that the distributed property be valued as if the corporation had sold it. The plain reference is to the corporation’s property. This is made even plainer by subsection 311(d)(1)(A), which specifically *1239refers to property distributed by the corporation, and subparagraph (B), which refers to “the fair market value of such property.” Finally, the parenthetical clause of subpara-graph (B) refers to the property and its adjusted basis “(in the hands of the distributing corporation).”
We conclude that the plain meaning of section 311(d)(1) requires that the gain recognized by Pope & Talbot be valued as if the corporation had sold the Washington Properties at the time of distribution, not by aggregating the value of the individual limited partnership units.
The legislative history supports this conclusion. Since 1969 Congress has passed several income tax measures that have progressively repealed the controversial holding of the Supreme Court in General Utilities & Operating Co. v. Helvering, 296 U.S. 200, 56 S.Ct. 185, 80 L.Ed. 154 (1935). The General Utilities case gave corporations a loophole through which they could avoid the traditional two-tier taxation of corporate income. See generally Boris I. Bittker & James S. Eustice, Federal Income Tax of Corporations and Shareholders ¶ 8.20 (6th Ed.1998). In General Utilities, the Supreme Court held that a corporation was not required to recognize gain when it distributed appreciated property to its shareholders. General Utilities, 296 U.S. at 206, 56 S.Ct. 185.
Congress began its repeal of the General Utilities holding with the Tax Reform Act of 1969, Pub.L. No. 91-172, § 905(a), 83 Stat. 487 (1969). That Act provided that a corporation distributing property to a shareholder in a redemption must recognize gain to the extent the fair market value of the property distributed exceeds the corporation’s adjusted basis in the property. 26 U.S.C. § 311(d)(1) (1969). The legislative history of the Act includes the following:
General reasons for change. — Recently, large corporations have redeemed very substantial amounts of their own stock with appreciated property and in this manner have disposed of appreciated property for a corporate purpose to much the same effect as if the property had been sold and the stock had been redeemed with the proceeds of the sale. The appreciation is not taxed [sic] however, on this type of disposition.
The committee does not believe that a corporation should be permitted to avoid tax on any appreciated property (investments, inventory, or business property) by disposing of the property in this manner.
Explanation of provisions. — The committee amendments provide that if a corporation distributes property to a shareholder in redemption of part or all of his stock and the property has appreciated in value in the hands of the distributing corporation (i.e. [sic] the fair market value of the property exceeds its adjusted basis), then gain is to be recognized to the distributing corporation to the extent of the appreciation ....
S.Rep. No. 91-552, at 279 (1969), 1969-3 C.B. 423, 600; H.R. Conf. Rep. No. 91-782, at 333 (1969), 1969-3 C.B. 644, 677.
Pope & Talbot argues that the “evident purpose” emerging from this legislative history was Congress’s intent to “equalize” the tax treatment between a pre-distribution sale by the corporation and a post-distribution sale by the shareholder. We disagree.
The legislative history of the 1969 Act points to Congress’s concern about a corporation avoiding taxable gain when it distributes appreciated property to its shareholders in redemption of the corporation’s stock. The legislative history says nothing about what gain shareholders might have to recognize. The focus is entirely on the value of the distributed property in the hands of the corporation, not on its value once the distribution to the shareholders is completed.
Congress continued its repeal of the General Utilities doctrine with the Deficit Reduction Act of 1984, Pub.L. No. 98-369, § 54, 98 Stat. 568 (1984). This Act amended section 311(d)(1) by providing that gain would be recognized if a corporation distributes property to a shareholder in a “distribution to which subpart A applies,” not just in dis*1240tributions involving redemptions.2 The legislative history of the 1984 amendment again points to Congress’s purpose:
Reasons for Change
In many situations, present law permits a corporation to distribute appreciated property to its shareholders without recognizing the gain. In such a case, if the distributee is an individual, the basis of the property will be stepped up without any corporate-level tax having been paid (although the individual shareholder will often have dividend income in an amount equal to the fair market value of the property). The committee believes that under a double-tax system, the distributing corporation generally should be taxed on any appreciation in value of any property distributed in a non-liquidating distribution. For example, had the corporation sold the property and distributed the proceeds, it rvould have been taxed. The result shoidd not be different if the corporation distributes the property to its shareholders and the shareholders then sell it....
Explanation of Provisions
Under the bill, gain (but not loss) is generally recognized to the distributing corporation on any ordinary, non-liquidating distribution, whether or not it qualifies as a dividend, of property to which subpart A (secs. SOI through 307) applies as if such property had been sold by the distributing corporation for its fair market value rather than distributed. The general rule applies whether or not there is a redemption of stock.
S.Rep. No. 98-169 (Vol.l), at 176-77 (1984) (emphasis added); H.R.Rep. No. 98-432 (Part 2), at 1189-90 (1984).
Regardless of the legislative history, Pope & Talbot argues that section 311(d)(1) must be read symmetrically with 26 U.S.C sections 301 and 302.3 Such a reading, Pope & Talbot contends, yields the conclusion that the “fair market value” of the property distributed by a corporation necessarily equals the “fair market value” of the property in the form it is received by the shareholders. We disagree with this reading of these sections.
Sections 301 and 302 focus on shareholders’ tax liability. Cases interpreting these sections usually concern to what extent shareholders receiving distributions should be taxed. See, e.g., Cordner v. United States, 671 F.2d 367 (9th Cir.1982) (holding that gold coins distributed to shareholders were “property” to be taxed at fair market value for purposes of section 301). However, if the corporation distributes one form of property and the shareholders receive another, there is no “symmetry.” That was the case here. The corporation did not distribute gold coins to shareholders who received gold coins. The corporation distributed the Washington Properties to the Partnership, and the shareholders received individual limited partnership interests. We conclude the tax court used the proper methodology to determine the fair market value of the distributed property.
We next consider the tax court’s actual valuation of the Washington Properties. Pope & Talbot argues that even if the value is to be determined by refex-ence to the value of the disti'ibuted pi'operty in the hands of the coi'poration, the tax coui't erred in not *1241finding that value to be the aggregate dollar amount of the limited partnership units on the date of distribution. That value, Pope & Talbot argues, is the true value placed on the Washington Properties by the market in actual sales of partnership units, not on some hypothetical sale conjured up for valuation purposes.
To support its argument, Pope & Talbot asks us to embrace the “Efficient Market Hypothesis.” This hypothesis theorizes that, in an efficient capital market, the trading prices of securities constitute unbiased estimates of the value of the underlying assets. Using this method of valuation, the Partnership’s assets would have an aggregate fair market value of approximately $41.5 million. This sum is obtained by adding the aggregate public trading price of the partnership units on the distribution date (1.2 million units x $11.50 per unit, or $13.8 million) to the initial indebtedness of the Partnership ($27.7 million).
The success of Pope & Talbot’s argument depends on applying to this case the general rule that, when one is valuing securities on a stock exchange, “the average exchange price quoted on the valuation date furnishes the most accurate, as well as the most readily ascertainable, measure of fair market value.” Amerada Hess Corp. v. Commissioner, 517 F.2d 75, 83 (3d Cir.1975) (holding the tax court erred in using the “barter-equation method” to fix fair market value of stock) (citations omitted). We are unpersuaded that this general rule applies to the Pope & Talbot distribution before us.
The rule in Amerada Hess applies to the valuation of stocks, not to the valuation of the underlying assets of a publicly traded entity. Furthermore, Amerada Hess qualifies the general rule relating to the valuation of stocks by noting that the “assumption underlying the concept of the market as an index for valuing particular property is that the property to be valued is substantially similar to the property actually' sold on the market.” Id. This hypothesis would not hold true, however, when, for example, stock is subject to restrictions on alienation or voting rights. See id. at 84. Moreover, the trading prices of securities in a free and active market often reflect the value of minority interests. Estate of Jung v. Commissioner, 101 T.C. 412, 434, 1993 WL 460544 (1993).4 We, therefore, reject a general principle that the market price of securities accurately reflects the value of underlying assets. Courts must choose valuation methods that best suit the circumstances.
For example, in Philip Morris, Inc. and Consolidated Subsidiaries v. Commissioner, the tax court had to determine the value of intangible assets of the Seven-Up Company, from which Philip Morris had acquired stock. Because a control premium had been paid for voting control, the court used an “excess earnings” approach, which yielded a value different from the aggregate trading value of the stock. Philip Morris, Inc. and Consol. Subs v. Commissioner, 96 T.C. 606, 628-32, 1991 WL 51559 (1991), aff'd without published opinion, 970 F.2d 897 (2d Cir.1992).
Common sense also dictates that the value of an entire interest in property, such as the Washington Properties, is greater than the sum of its fractional parts. Case law is not to the contrary. Given that fractional interests are restricted in their control of the overall property, “courts have consistently recognized that the sum of all fractional interests in a property is less than the whole and have upheld the use of fractional interest discounts in valuing undivided interests.” Estate of Bonner v. United States, 84 F.3d 196, 197 (5th Cir.1996) (citations omitted).
These principles apply to the present case. The Pope & Talbot shareholders who re*1242ceived limited partnership units in the Partnership received fractional parts of the whole. These fractional parts also bore some burdens. As the tax court found, the limited partners had no management powers, limited voting rights, and significant limitations on their power to remove the managing general partner.
In addition, the limited partnership interests were newly issued. This circumstance made the units difficult to value. According to a report prepared by Kidder, Peabody & Co. prior to the distribution, once the limited partnership units were placed on the market, the units would be “very undervalued relative to the market value of the Partnership’s underlying assets” because of “low cash distribution,” “the complexity of tax issues,” “uncertainty over future tax law changes,” and “small market capitalization of the units.” Kidder, Peabody believed that a trading value of $5 to $7 per unit was possible, but estimated that “the underlying asset value could be around $26 a unit.”
Finally, in Pope & Talbot’s proxy statement to its shareholders, Pope & Talbot stated that the corporation was transferring the Washington Properties to the Partnership because it believed that the market value of the properties was not fully reflected in the trading price of Pope & Talbot’s stock. Although we understand that this statement describes the market value of the Washington Properties while they were being overshadowed by Pope & Talbot’s other assets, such a motive in transferring the assets nevertheless undercuts Pope & Talbot’s “Efficient Market Hypothesis” argument.
Because market valuation based on sales of the individual limited partnership units would not accurately value the Washington Properties, the tax court properly turned to expert appraisals. The court heard extensive valuation testimony, finally determining a valuation range for the Washington Properties of between $46.7 million and $59.7 million. It also considered the aggregate trading price of the partnership units and ultimately found the fair market value of the Washington Properties on the date of distribution to be $48.5 million. The tax court did not err in making this finding.
Ill
CONCLUSION
We affirm the tax court’s decision that the gain on the distribution of appreciated property under 26 U.S.C. § 311(d)(1) is to be determined as if the distributed property had been sold by the corporation at the time of distribution. We also affirm the tax court’s valuation of the distributed property.
AFFIRMED.
. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the taxable years in issue (1985 and 1986).
. Subpart A, which encompasses 26 U.S.C. sections 301 through 307, sets forth the effects of corporate distributions on recipients. Section 301 concerns the distributions of property; section 302 concerns distributions in redemption of slock; section 303 concerns distributions in redemption of stock to pay death taxes; section 304 concerns redemption through use of related corporations; section 305 concerns distributions of stock and stock rights; section 306 concerns dispositions of certain slock; and section 307 concerns the basis of stock and stock rights acquired in distributions. 26 U.S.C. §§ 301-307.
. Section 301 sets forth how a shareholder receiving a distribution of properly should be taxed, specifically requiring that the "amount of any distribution shall be the amount of money received, plus the fair market value of the other property received.” Under section 302, a redemption transaction is treated either as an exchange whereby section 1001 applies or as a distribution of property whereby section 301 applies. If it is treated as an exchange, section 1001 requires that the amount realized be the sum of any money received plus the "fair market value of the property received." 26 U.S.C. §§ 301 and 302 (1984).
. Pope & Talbot contends that Estate of Jung is inapposite because it involved a closely held corporation. This distinction is not significant because Estate of Jung also discussed stocks traded in the public market. Citing a commentator, the court in Jung discussed the applicability of minority discounts generically, not just as applied to close corporations. Unlike market discounts, which apply only to close corporations, minority discounts arise in many valuation situations where blocks of stock represent minority ownerships. "Minority blocks of stock, by themselves, generally do not have the power ... to effect any significant corporate change ..." Id. (citing Zukin & Mavredakis, Financial Valuation: Businesses and Business Interests ¶ 6.9[2], at 6-39 (1990)).