- 19 -
agreement, however, specifically provides that the lessee is to
pay the rent on the first of each month. Further, the
partnership had a cash balance of $64,339 as of the valuation
date. Zitelman's analysis does not provide adequate support or
explanation of treatment of that cash or his assumptions
regarding the projected interest income.
Second, we find Zitelman's estimate of the expected expenses
is likewise flawed. For example, Zitelman assumed that the
management fees equal 5 percent of the gross rentals each year.
These fees, however, are subject to the discretion of the general
partners. We see no reason to assume that the fee will always be
5 percent rather than 2 percent, as it was in taxable years 1989
and 1990. Zitelman included expense amounts and reductions in
the expected cash-flows for which he offered no explanation. We
have disregarded those amounts. Zitelman's calculation of the
franchise taxes appears to be too low, but the record does not
provide adequate information by which to recalculate those
amounts.
Finally, Zitelman estimated the liquidation costs at the end
of the lease term in 2062. We find these amounts to be too
speculative, conjectural, and remote. See Estate of Bennett v.
Commissioner, T.C. Memo. 1993-34.
Despite our concerns, Zitelman's analysis makes several
valid conclusions. With the weaknesses discussed above in mind,
we have estimated the value of decedent's interest by modifying
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