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Commissioner, T.C. Memo. 1998-325, the parties have stipulated
the precise, actual annual gross rents for the statutory period.
Consequently, with their escalation clauses, the stipulated
rents constitute the prevailing rents actually paid on comparable
land in western Alabama under the typical/standard lease in
effect during the statutory period. Once the unleased and the
leased land are determined to be comparable (as we have found),
section 2032A(e)(7) permits petitioner to use for valuation
purposes the average annual gross cash rents for the 5 calendar
years preceding decedent's death.
III. Standing Timber
Petitioner asserts that the rent capitalization method of
valuing farms incorporates the timber on the five estate tracts
because (i) the right to cut timber is embedded in the standard
timber leases from which that value is drawn, and (ii) the estate
made a proper "qualified woodland" election pursuant to section
2032A(e)(13). Respondent contends that the rent capitalization
value includes only the value of the bare land and does not
include the timber growing on decedent’s lands.
Congress adopted section 2032A(e)(13) as part of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, sec. 421(h), 95
Stat. 172, 311-312, which provides:
(13) Special rules for woodlands.--
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