Freres Lumber Co., Inc. - Page 31

                                                 - 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                              





Page:  Previous  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  Next

Last modified: May 25, 2011