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what he deemed to be three comparable sales of fractional real
estate interests. The net result was that Lipscomb valued a 50-
percent undivided interest in the leased land as of March 31,
1991, at $310,250.
Dilmore used an income capitalization approach to arrive at
a $210,000 value for an undivided one-half fee interest in the
leased land as of March 31, 1991, after applying a 15-percent
discount for an undivided interest in the property.
Haney’s report is limited to identifying various factors
that could negatively affect the value of the reversionary
interest in the leased land at the expiration of the long-term
timber lease on January 1, 2023 (the reversion); he provided no
specific dollar estimate of the reversion’s value.
Respondent’s expert, Mr. Richard A. Maloy (Maloy), also used
an income capitalization approach, valuing petitioner’s entire
fee interest in the leased land, as of March 31, 1991, at
$1,547,000, calculated as the present value of the income stream
(contract rents) plus the present value of the reversion.
Maloy’s determination of present value reflects no discounts for
fractional interests or limited marketability.
On brief, petitioner argues that the proper and most
realistic way to value land subject to a long-term timber lease
is to use an income capitalization methodology such as was
employed in Saunders v. United States, 48 AFTR 2d 81-6279, 81-2
USTC par. 13,419 (M.D. Ga. 1981). Accordingly, the parties are
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