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value of property includible in decedent's estate, the appropri-
ate inquiry is a factual one: What would a hypothetical willing
seller and a hypothetical willing buyer take into account in
arriving at a price for the remaining unimproved properties?
See, e.g., Estate of Davis v. Commissioner, 110 T.C. 530 (1998);
see also sec. 20.2031-1(b), Estate Tax Regs.7
Respondent contends for the first time in respondent's
answering brief that "Marrero Land did not contemplate liquidat-
ing its remaining vacant land".8 To the extent that respondent
is arguing under respondent's new theory that, as a factual
matter, no absorption discount is warranted under Estate of
Andrews v. Commissioner, 79 T.C. 938 (1982), in valuing the
7Since valuation is a question of fact, and not of law, in
at least one case decided after Estate of Andrews v. Commis-
sioner, 79 T.C. 938 (1982), we allowed an absorption discount in
a situation involving corporate-owned real estate. See Carr v.
Commissioner, T.C. Memo. 1985-19. In Carr, we were asked to
determine the fair market value of certain stock in a corporation
which owned real estate and the principal business activity of
which was purchasing undeveloped land, subdividing and improving
it, and selling the lots either as such or with homes that it
built. We also allowed an absorption discount in a situation
involving corporate-owned real estate before Estate of Andrews v.
Commissioner, supra, was decided. See Estate of Folks v. Com-
missioner, T.C. Memo. 1982-43; Estate of Grootemaat v. Commis-
sioner, T.C. Memo. 1979-49.
8Respondent also contends that Marrero Land "had no plans to
liquidate". Although it is true that Marrero Land had no plans
to liquidate as of the valuation date, that fact is not determi-
native of whether an absorption discount may be taken into
account in valuing the remaining unimproved real properties that
it owned on that date.
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