- 35 -
percent and that 40 percent is therefore appropriate. Hulberg,
in addition to addressing the lack of approval for residential
development, factored in the lapse of time in arriving at a 40-
percent discount rate. We did not find any of Hulberg’s
approaches to be fitting or appropriate to the situation we
consider, although we agree that some discount would be
appropriate. In summary, Hulberg first discounted by as much as
80 percent, and then discounted the resulting amount by an
additional 41 percent reflecting various factors, including lack
of control, passage of time, and factors that would only be
relevant in the consideration of a going partnership.
On the other hand, DeVoe, petitioner’s appraiser who was
used to provide a value for the estate tax return, started with a
$137,500-per-acre value and discounted it by 40 percent to
account for the partial interest. That approach resulted in a
$3,810,000 value’s being reported on the estate tax return. We
have concluded that the per acre cash value is $150,000 and have
discounted that amount to account for the passage of time and, to
some extent, for the risk associated with the possibility that
approval for development might not be obtained. That discount
resulted in reducing the value of decedent’s one-half interest
from $6,805,500 ($150,000 x 90.74 x .50) to $4,656,496 (see
present value computations, supra, p. 28) or a reduction of 31.6
percent. Based on our evaluation of the evidence, it appears
that DeVoe’s valuation appraisal was conservatively performed
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011