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approach of estimating the cost to complete and the reimbursement
of part of that cost have no meaningful relationship to
decedent’s asset--the partially completed residence. At the date
of death, the estate had no right to receive insurance
reimbursement and no obligation to pay for the completion of the
residence. For that reason, we sustain respondent’s
determination that the gross estate be increased by $122,4006.
Next, we consider respondent’s determination that the
incomplete residence should be valued by considering its value if
finished. From respondent’s perspective, decedent had a contract
right or chose in action that was worth, at very least, the
difference between the incomplete structure and its ultimate
selling value. The estate reported the value of the incomplete
structure at $612,000, the value set forth in the appraisal
attached to the estate’s return. The appraisal utilized a cost-
per-square-foot approach to project the completed value of the
then 57-percent completed residence at $1,032,000.
Appropriately, the appraiser’s cost approach did not rely on the
actual cost, which was more than the cost to build a contemporary
residence and did not comport with fair market values of
comparable residences. The appraiser’s valuation was
6 The $122,400 increase in the gross estate is a net result
of the disallowance of the amount claimed as due to the
residential contractor and the removal from the gross estate of
the amount included as possible recovery from the insurance
company.
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