- 31 -
substances which could decrease its value. We believe this is
quite possible because other parts of the property had been
contaminated with pentachlorophenol.
Respondent criticizes Goss' conclusion that the highest and
best use of the ancillary land was agricultural development and
points out that it was zoned for industrial use. We find Goss'
opinion that development of the entire site is unlikely because
part of it is zoned for farm/forest use to be reasonable.
Respondent offered no contrary evidence.
Respondent criticizes Goss for failing to consider the
potential for planting timber on the ancillary land. However,
Goss did just that in discussing the use and zoning of the land.
We conclude that the fair market value of the land on
March 1, 1988, was $145,000.
C. Allocation for Goodwill or Going-Concern Value
1. Section 1060 and the Parties' Contentions
The parties agree that section 1060 applies to the Walker
asset sale. Under section 1060, assets are divided into four
classes: Class I (cash and demand deposits), class II
(certificates of deposit, Federal securities, readily marketable
stock and securities, and foreign currency), class III (includes
accounts receivable, equipment, buildings, land, and covenants
not to compete), and class IV (goodwill and going-concern value).
Sec. 1.1060-1T(a)(1), (b)(1), (d), Temporary Income Tax Regs., 53
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