- 13 -
expert's ultimate conclusion if unsupported by the record.
Owensby & Kritikos, Inc. v. Commissioner, 819 F.2d 1315, 1331
(5th Cir. 1987), affg. T.C. Memo. 1985-267.
Valuation Methodology
The parties presented two alternative methods of valuing the
Property: (1) The comparable sales method (CSM); and (2) the
subdivision development method (SDM). The CSM involves gathering
information on sales of property similar to the subject property,
then making adjustments for various differences between the
"comparables" and the property being appraised. Estate of
Spruill v. Commissioner, 88 T.C. 1197, 1229 n.24 (1987).
The SDM determines the value of undeveloped land by treating
the land as if it were subdivided, developed, and sold. From the
proceeds of sale, development costs are then subtracted.
Finally, the expected net proceeds are discounted over the
estimated period required for market absorption of the developed
lots in order to determine the amount a developer would pay for
the undeveloped property; i.e., the property's fair market value.
Branch v. Commissioner, T.C. Memo. 1987-321.
In his report, Mr. Avery used both methods to value the
Property, relying primarily on the SDM. Although he used the CSM
for support, Mr. Avery admitted that "none of the parcels
analyzed had the locational or physical attributes of the subject
property." As a result of these differences, Mr. Avery made
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011