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trial, Lambert admitted he should have used an earlier lease for
Lease Comparable No. 4 in effect on March 31, 1987 (which changed
the rental rate from $5.24 in 1991 to $3.38 in 1987).
We think that the use of these comparables without relevant
adjustments for market conditions and time was inappropriate in
light of the "precipitous" decline in real estate values in
Lafayette in late 1986 and the fact that the recession in
Lafayette was severest during 1985 through 1987, with the lowest
point occurring during the first quarter of 1987 when the
transfer of the Property occurred. Because the validity of an
expert's determination depends upon on the comparables selected
and the adjustments, Wolfsen Land & Cattle Co. v. Commissioner,
72 T.C. at 19-20, we discount Lambert's determination of the
Property's FMV.
Moreover, 10 of the transactions used by Lambert in his
appraisal report took place outside of the Lafayette market. Of
those transactions, Lease Comparables 1 and 2 were located in
Sulphur, Louisiana. Lease Comparable 3 was in Lake Charles,
Louisiana. Lease Comparables 5, 6, 8, and 9 were in Baton Rouge,
Louisiana. Lease Comparable 7 was in Gonzales, Louisiana.
Lambert does not provide any information in his report that the
lease rates in these various markets were similar to those in
Lafayette; he himself stated that the Lafayette market suffered
the most in Louisiana due to the recession. Thus, we conclude
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