- 13 -
From the average annual gross cash rental, as above
computed, the average annual State and local real estate taxes
for the comparable land is subtracted. The result of the
subtraction is then divided by the average annual effective
interest rate for all new Federal Land Bank loans. Sec.
2032A(e)(7)(A). (The IRS issues an annual revenue ruling setting
forth the effective interest rate for each of the regional
Federal Land Bank Districts. The effective interest rate for the
Columbia Farm Credit Bank district in which the respective
property is located was 10.87 percent for 1992. Rev. Rul. 92-12,
1992-1 C.B. 311.) The quotient resulting from the foregoing
division is the special use value of the qualified real property.
Petitioner claims to derive its special use value of the
subject property from the annual cash rental value of $15 per
acre set forth in the May 10, 1993, special use valuation report
(report) of its expert, Frazer. (We note that the figure of
$375,711 reported on the amended return appears nowhere in
Frazer's report, nor has the Court been able to determine how
such a special use value was reached by petitioner. Based on our
calculations, and assuming for this purpose only that Frazer's
$15 per acre cash rental value for the subject property is
correct, 2,929.1 acres of qualified woodlands times $15 per acre,
without subtracting property taxes (Frazer stated that these were
usually paid by lessees in these types of leases, so it is
assumed that Frazer's $15 per acre is a net figure), equals
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