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a single February 17, 2001, closing date. Ponderosa, through
this time, had paid nonrefundable payments (that were not to be
applied to the purchase price) to the Busch property owners
ranging from about $500,000 to about $1 million. As of the end
of 1998, approval had not yet been received, and Ponderosa
continued to experience difficulties in the process of attempting
to gain approval for development.
OPINION
This case involves the valuation of real property for estate
tax purposes. We must decide the value of decedent’s one-half
interest in the subject property. The estate reported a fee
simple value of $12,700,000 and discounted decedent’s one-half
interest ($6,350,000) by 40 percent to reach the $3,810,000 value
reported as includable in the gross estate. The estate’s
valuation was predicated on the assumption that residential
development is the highest and best use for the property.
Respondent, after examining the estate’s return, valued
decedent’s one-half interest in the property at $7,400,000, also
assuming that residential development is the highest and best use
of the property. In the context of litigation, petitioner now
contends that decedent’s interest in the property should have
been valued and included in the gross estate at $680,000.3
3 We have held that a higher reported value is an admission,
requiring an estate to produce “cogent proof that the reported
values were erroneous.” Estate of Hall v. Commissioner, 92 T.C.
(continued...)
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