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automobile dealership business were installed in accordance with
the latest EPA regulations to insure that no leakage or
contamination of the soil was possible. Aguilar based his
$50,000 deduction on the cost to remove the tanks in the absence
of any contamination of the soil.
We think that such a deduction in this case is not
reasonable. Previously, this Court has stated that it may be
appropriate to discount the value of real property for the
presence of underground storage tanks, which pose a hazardous
waste problem, provided that the amount of the discount is
properly quantified. See Estate of Pillsbury v. Commissioner,
T.C. Memo. 1992-425. In that case, we opined that "The question
to be decided is whether a hypothetical buyer * * * with
reasonable knowledge of the relevant facts, would have discounted
the value of the * * * property". Id. We did not sustain a
discount for possible contamination because neither the appraiser
nor the taxpayer believed further investigation was necessary
before stating a value for the property, and no evidence was
presented from which such a discount could be determined.
In this case, as a starting point, we look to the Property's
highest and best use as a car dealership. The underground
storage tanks (one for gasoline and one for waste oil) are
essential to the operation of an automobile dealership on the
Property. There is no evidence that the soil of the Property was
contaminated as of March 31, 1987. Further, Aguilar stated in
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