- 31 -
There is no fixed formula for applying the factors that are
considered in determining fair market value of an asset. See
Estate of Davis v. Commissioner, 110 T.C. at 536 (in determining
the fair market value of minority blocks of stock in a
corporation, it was appropriate to take into consideration built-
in capital gains tax on the stock). The weight given to each
factor depends upon the facts of each case. See id. at 536-537.
Here, the relevant inquiry is whether a hypothetical willing
seller and a hypothetical willing buyer, as of the date of
petitioner’s gifts, would have agreed to a price for the lease
income stream that took no account of tax consequences. See id.
at 550-554; see also Eisenberg v. Commissioner, 155 F.3d 50
(2d Cir. 1998); Estate of Borgatello v. Commissioner, T.C. Memo.
2000-264; Estate of Jameson v. Commissioner, T.C. Memo. 1999-43.
A treatise relied upon by both parties states:
Present value can be calculated with or without
considering the impact of * * * income taxes as long as
the specific rights being appraised are clearly
identified. The techniques and procedures selected are
determined by the purpose of the analysis, the
availability of data, and the market practices.
[Appraisal Institute, The Appraisal of Real Estate 462
(11th ed. 1996).16]
16 In his rebuttal report, Maloy cites the above-cited
treatise for the different proposition that present value
analysis is properly applied using before-tax income streams.
Maloy has provided no page reference for his interpretation of
the treatise, and we conclude that his reliance on the treatise
is in error.
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011