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the average annual gross cash rental may
be determined * * *, or
(ii) where the executor elects to
have the value of the farm for farming
purposes determined under paragraph (8).
Petitioner maintains that its special use valuation report
provided sufficient information to satisfy section 2032A(e)(7)
and the regulations thereunder. In the alternative, petitioner
maintains that its method of valuation qualified under section
2032A(e)(8). Respondent disagrees with both assertions.
1. Section 2032A(e)(7)
The regulations interpreting section 2032A(e)(7) provide
that, in general, the special use value of farm real property is
determined by:
(1) Subtracting the average annual state
and local real estate taxes on actual tracts
of comparable real property in the same
locality from the average annual gross cash
rental for that same comparable property, and
(2) Dividing the results so obtained by the
average annual effective interest rate charged on
new Federal land bank loans. [Sec. 20.2032A-
4(a)(1) and (2), Estate Tax Regs.]
The first issue we must decide is whether petitioner complied
with paragraph (1), above. It is undisputed that petitioner did
not submit information on property taxes on comparable
properties. Petitioner asserts that this lack of information
should not invalidate its election because the omission has not
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