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investment an unrelated lessor of comparable property
would require; and (2) the fair market value of the
subject property at the beginning of each lease year.
* * *
Similarly, in Osterlund, Inc. v. Commissioner, T.C. Memo.
1987-40, we stated:
All three of these experts used essentially the same
method to derive their estimates of the Property's fair
rental value. They first estimated the Property's fair
market value using comparable sales of property. They
then multiplied their estimates of the Property's fair
market value by a rate of return they believed a lessor
of property similar to the Property would have required
during the years in question upon leasing such property
in an arm's-length transaction. We agree with the
parties that this is a reasonable method for
determining the fair rental value of the Property.
We are not bound by the opinion of any expert witness and
may accept or reject expert testimony in the exercise of sound
judgment. Helvering v. Natl. Grocery Co., 304 U.S. 282, 295
(1938); Estate of Hall v. Commissioner, 92 T.C. 312, 338 (1989).
We give very little weight to Mr. McIntosh’s testimony
because his reports contain no analysis and little reliable data
to aid us in determining the fair market rental value of the
subject properties, and because his testimony on a number of
matters was simply not credible.
We also give little weight to Mr. Vanderbundt’s report. Mr.
Vanderbundt’s report was based on a single “comparable” to
support his rental rate conclusions. His “comparable” was a
lease between related parties for a property in Lodi, California,
which had been supplied to him by petitioner. This single
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