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of soil and terrain, the expected growth rate of the trees, and
water resources on the timber farm.
Petitioner also studied information received from the U.S.
Forest Service relating to tree growth and management.
After inspecting the timber farm and conferring with experts
and after considering the financial risks and profit potential,
in June of 1985 petitioners purchased for $568,890 in cash the
timber farm in Coos County, Oregon.
The timber farm included 454 acres of forest land covered
primarily with Douglas fir and spruce trees, 152 acres of bottom
land, a number of barns, sheds, and three small houses.
In 1985, the Douglas fir, spruce, and other trees located on
the timber farm were of an average age of 30 to 40 years. The
trees were just reaching their peak growth rate, growing at a
rate of approximately 10 percent per year.
Petitioner agreed to the $568,890 purchase price for the
timber farm based on his analysis that, as of the time of
purchase in June of 1985, the cumulative value of the standing
timber on the timber farm, of the land, and of the existing
buildings and improvements totaled approximately $750,000.
For many years prior to 1985, the timber farm that
petitioners purchased was considered timber farm property on
which trees had been grown, cut, and commercially logged. The
prior owners of the timber farm last conducted a major harvest of
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