- 26 -
market change and time under the market-data approach was
inappropriate.
Furthermore, Parker viewed Land Sale No. 2 as an arm's-
length transaction even though it was actually a sale of an
undivided half-interest in property between a mother and
daughter. Transactions between family members are not arm's-
length transactions and are subject to special scrutiny. Harwood
v. Commissioner, 82 T.C. 239, 258 (1984), affd. without published
opinion 786 F.2d 1174 (9th Cir. 1986); Estate of Whitt v.
Commissioner, T.C. Memo. 1983-262, affd. 751 F.2d 1548 (11th Cir.
1985). Respondent's expert Lambert stated that, as no money was
actually transferred between the two parties, it should not be
viewed as a comparable sale. We find Lambert's testimony on this
point credible, and we agree with his conclusion.
Finally, Parker deducted $450,000--an amount equal to half
of the purchase price--from Land Sale No. 1 for superior market
conditions with no explanation as to how he arrived at a
deduction of such magnitude.
Petitioner's second expert, Aguilar, prepared his report in
October 1991. For the replacement-cost approach, Aguilar used 6
land sales as comparables, which he then adjusted for size, date
of sale, and corner influence. Aguilar valued the underlying
land at $268,167, or $3 per square foot. Aguilar looked only at
land sale comparables as of March 31, 1987; he did not look at
sales occurring after that date. Aguilar then estimated the
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