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capitalization value is derived constituted the consideration for
the right to grow and cut timber. The rent capitalization value
captures the value of that timber just as Congress contemplated
in the section 2032A(e)(13) qualified woodland election.
The standard timber leases on the five leased tracts include
the "timber * * * rented for timber growing purposes", as
demonstrated by the following two stipulated facts. First, the
rent paid under the leases applicable to the five leased tracts
includes the consideration paid for the right to grow and cut the
timber grown on the leased property during the term of the lease.
Second, the estate timely elected and qualified for a "qualified
woodland" election on section 2032A property that the estate
seeks to value by reference to these timber leases. The value of
the timberland is, therefore, included in the rent capitalization
value of those tracts.
Respondent also contends that the "segmenting" language of
section 20.2032A-4(d), Estate Tax Regs., requires that the timber
be separately valued. Respondent cites section 20.2032A-4(d),
Estate Tax Regs., which provides:
It will, therefore, frequently be necessary to value farm
property in segments where there are different uses or land
characteristics included in the specially valued farm. * * *
In cases involving multiple areas or land characteristics,
actual comparable property for each segment must be used,
and the rentals and taxes from all such properties combined
(using generally accepted real property valuation rules) for
use in the valuation formula given in this section.
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