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value by determining an applicable discount rate and discounting
to present value a property's anticipated income and any salvage
value which may remain at the end of the property's economic
life. See United States v. Dresser Indus., Inc., 324 F.2d 56
(5th Cir. 1963); Concord Control, Inc. v. Commissioner, 78 T.C.
742 (1982), affd. in part and remanded 615 F.2d 1153 (6th Cir.
1980).
Using the capitalization of income method of valuation,
petitioner values the sewer line at $80,000. As we understand
petitioner’s argument, since petitioner contends the fair market
value of the sewer line is $80,000 and petitioner contributed
$150,000 of its own funds to construct the sewer line, none of
the $200,000 expended from escrow would be includable in income
for 1989.
Expert Testimony
In support of the use of the capitalization of income method
of valuation, petitioner used Daniel Lee Jones (Mr. Jones) as an
expert witness. Petitioner contends that Mr. Jones is an expert
in the valuation of the subject sewer line based on his knowledge
and expertise. Respondent disagrees and objects to the receipt
of Mr. Jones' report into evidence. The report was received into
evidence subject to respondent's objections noted in the record.
Mr. Jones is a certified public accountant (C.P.A.) with the
certified public accounting firm of Daniel Jones & Associates,
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