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The valuation engineer’s appraisal report, attached to the
30-day letter, generally agrees with the estates’ valuation of
fair market value of the 16 parcels, but does not accept the
discounts applied by the estates. The engineer’s report contains
a discussion of the fact that (1) John’s estate applied an
increasing progression of discounts and that (2) each discount
was supported by an opinion from a third party. The valuation
engineer’s report also provides an analysis of the estates’
appraisals and proposed comparables. Finally, the report
contains an analysis of valuation cases and the following
explanation for arriving at a $975,091 value for John’s 14/65
interest:
Using the recommended full interest value for the 2,957
acres of $4,685,331, a discount can be determined using
a cost of a revised timber inventory, surveying the
property into equal valued “lots” and legal costs
associated with the partition of the property.
Dividing the property into 40 acre “lots”, or
variations thereof, and an estimated $1,000 per survey
mile results in survey cost[s] of $49,250. A revised
timber inventory would cost $8,871. Legal cost, as
recommended by the Estate Agent, would approximate
$100,000. The total cost of partition would
approximate $158,121. Louisiana law cites all
partition cost[s] are borne in the pro-rata share of
ownership. Subtracting the partition cost of $158,121
from the recommended value of $4,685,331, results in an
after cost value of $4,527,210. Mr. John Baird owned a
14/65th interest in the property or a total recommended
estate value [of] $975,091.
In the March 4, 1999, notice of deficiency, respondent
relied on the valuation engineer to determine that John’s 14/65
interest had a fair market value of $975,091. In that regard,
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Last modified: May 25, 2011