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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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