- 6 - consecutive 5-year options to renew the lease at a fair market rental value. The postdeath lease set the initial rent at $7.50 per acre annually and $12,000 annually per each residence located on the land. The postdeath lease on the Cotulla Ranch allowed hunting on the leased properties with the express written consent of the lessors. Hunting had been prohibited in all prior written leases because decedent was adamant that the ranchlands would not be used for hunting. The estate reported the fair market value of the Sinton Ranch at $2.6 million on its Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Schedule A, Real Estate. The real estate appraisal report that was prepared by Thomas F. Dorsey (Dorsey) and submitted with the estate’s Form 706 concluded that the unencumbered fair market value of decedent’s interest in the Sinton Ranch on decedent’s date of death was $4,150,000 and that the fair market value of the Sinton Ranch encumbered by the postdeath lease was $3,350,000. In the notice of deficiency, respondent determined that the fair market value of the Sinton Ranch on the date of decedent’s death was $4,150,000. Respondent reduced the value by $750,000 for a valid election under section 2032A. The estate reported the fair market value of the interest in the Cotulla Ranch on Form 706, Schedule A, at $1,070,000. The real estate appraisal report that was prepared by Dorsey andPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011