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Parker v. Commissioner, 86 T.C. at 562, we conclude the following
with respect to the fair market value of decedent's interest in
each of the Nipomo properties.
1. Per-Acre Value of the Nipomo Properties
We conclude that the per-acre value of a fee simple interest
in parcels 5, 6, and 9 was $900. This represents a 25-percent
reduction from Mr. Hamel's indicated value of $1,200.
Considering the paramount importance of location in valuing real
estate, Mr. Hamel’s failure to adjust for location in his report
was material. Our determination of fair market values takes into
account his failure to adjust for location and for differences in
zoning, irrigated land, water rights, and other factors for which
he should have adjusted but did not.
We conclude that the fair market value of a fee simple
interest in parcel 10 was $1,750, or approximately $250 per acre.
Petitioner claimed that the per-acre value of the property was
approximately $50, while Mr. Hamel valued it at $1,200, the same
as the other Nipomo parcels. However, in the text of his report,
Mr. Hamel noted the difficulties associated with this parcel:
Parcel 10 is, in my opinion, an uneconomic remnant that
was the result of a realignment of Highway 166.
Planning officials in San Luis Obispo have stated that
bisection by a public road generally does not result in
the creation of a new legal parcel.
Because we think that a transaction between a hypothetical
willing buyer and willing seller would factor in the possibility
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