Estate of Lewis A. Bailey, Deceased, Frances Jeanette Foster, Executrix - Page 20

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          2–-an ownership interest that cannot reliably be assumed to have            
          a value equal to one-half the value of the whole.                           
               More fundamentally, we are unpersuaded by Biles’ conclusion            
          that the California motel should be valued at $819,000.5  As                
          previously discussed, the primary focus of Biles’ “desk review”             
          was the Ohrmund report’s application of the income method and, in           
          particular, its indicated capitalization rate and net income                
          figures.  The reasons Biles gives in support of his adjustments             
          to the Ohrmund report are highly conclusory and lacking in                  
          analytical support.  For instance, Biles’ downward adjustment of            
          the California motel’s value on account of the alleged need of              
          decedent’s estate to make a “distress sale” to settle the estate            
          (an otherwise unsubstantiated factual premise) is inconsistent              
          with the concept of fair market value as determined by reference            
          to a hypothetical willing buyer and willing seller.  “The fair              
          market value is the price at which the property would change                
          hands between a willing buyer and a willing seller, neither being           
          under any compulsion to buy or to sell * * *.  The fair market              
          value * * * is not to be determined by a forced sale price.”                
          Sec. 20.2031-1(b), Estate Tax Regs.                                         

               5 Although petitioner seems to suggest that Biles’ downward            
          adjustment of the $1,388,000 Ohrmund report valuation resulted              
          from Biles’ consideration of decedent’s individual ownership                
          interest in parcel 2, Biles’ report clearly indicates that this             
          was just one of several factors that entered into his analysis.             
          Although Biles mentions the parcel 2 title problem, he does not             
          separately identify its effects upon his final conclusions.                 

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