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proposed by respondent aggregates the merchantable timber value,
the value of the land without timber and improvements (the bare
land value), and the value of any improvements. The land value
component in the summation method is based on the comparative
sales approach.
Respondent relies on Estate of Sturgis v. Commissioner, T.C.
Memo. 1987-415, to support his position. The facts in Estate of
Sturgis indicate that both parties agreed that the highest and
best use of the Sturgis property was as timberland, and each
expert had valued the Sturgis property by a standard methodology
that aggregated the values of the separate components. The land
valuation analysis relied on by the Court took into consideration
accessibility for cutting the timber, soil data, timber data, and
shape.
We find respondent’s reliance on Estate of Sturgis is
misplaced for three reasons. First, we are unpersuaded that Mr.
Pellum’s timber valuation did not apply a clear-cutting approach.
Mr. Pellum did not testify, and his report does not indicate
whether he considered the negative effects of clear-cutting all
of the standing timber on more than 70 percent of DP’s total
acreage (1,481 forested acres/2,095.12 total acres). Second,
none of the land valuations in this case, including Mr.
Middleton’s, considered timber-related issues such as soil
quality, accessibility, and drainage as did the land valuation
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