- 15 -
We do not place much reliance on the estate’s trial expert’s
departure from the cost approach that had been used by the
appraiser, whose report was attached to the estate tax return.
The appraisal attached to the estate tax return used a
contemporaneous cost-per-square-foot approach to determining
value, not the peculiar cost of the Manchester Drive residence.
Based on the use of the cost method, a $1,032,000 value was
placed on the completed residence, a value that was only $2,000
more that the eventual arm’s-length selling price. Moreover,
respondent has not questioned the credibility of the appraisal
attached to the return. Respondent appears to accept $612,000 as
being the value of the 57-percent completed residence on November
4, 1994. The Court also accepts that value as the amount that
should have been included in decedent’s gross estate.
Respondent, however, contends that the value should be
increased to reflect the completed value of the residence because
the insurance company agreed to reimburse decedent for rebuilding
the residence. The estate argues that decedent did not own any
asset, contract right, or chose in action that would enhance the
value of the incomplete residence at the time of her death. We
agree with the estate.
The concept of fair market value, in the context of Federal
taxation, has remained unchanged for more than 80 years. For
estate tax purposes, the amount includable in the gross estate is
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011