Estate of Cyril I. Magnin, Deceased, Donald Isaac Magnin, Executor - Page 31

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          $228,000.16  At trial and on brief, petitioner argued that the              
          value of the property was $170,000.  The fair market value of               
          property is a question of fact.  The value determination in the             
          notice of deficiency is presumed correct, and petitioner bears              
          the burden of proving otherwise.  Rule 142(a); Welch v.                     
          Helvering, supra.                                                           
               The subject property, a retail shoe store, is located in an            
          older, inner-city neighborhood, west of the downtown area of                
          Louisville.  The area is depressed, and property values have                
          steadily declined in the area since the 1960's.  The site is                
          zoned for commercial use.  The property was purchased by Cyril              
          for $207,721, and the deed was recorded in July 1983.  The                  
          property was subject to a lease, which commenced on April 26,               
          1983, and was for an initial term of 20 years.  At the end of the           
          initial lease period, the tenant had the right to extend the term           
          for two additional consecutive periods of 5 years each.  The                
          terms of the lease provided for minimum annual payments of                  
          $22,514, plus 5 percent of the gross sales less the minimum rent.           
          The tenant was responsible for all expenses directly related to             
          the property, including taxes, insurance, and interior and                  
          exterior maintenance.                                                       
               Petitioner introduced a report and testimony of its expert             


          16Respondent's valuation in the notice of deficiency of                     
          $228,000 was based upon the income stream provided for in the               
          lease capitalized at a rate of 10 percent.                                  




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