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1985 and that several factors show that parcel 1 was the most
valuable of the three parcels when they were purchased.
Generally, “We do not consider that the amount for which the
property was assessed for purposes of local taxation is
necessarily a reliable criterion to be used in estimating its
fair market value.”34 Frazee v. Commissioner, 98 T.C. 554, 563
(1992). However, in appropriate circumstances tax-assessed
values can be useful as a guideline or as corroboration of other
evidence of fair market value. Kellahan v. Commissioner, T.C.
Memo. 1999-210. And, in the case that we are concerned with the
relative values of several parts of a larger piece of property,
local tax assessments may be relied upon to provide the correct
value of a particular parcel of real estate. 2554-58 Creston
Corp. v. Commissioner, 40 T.C. 932, 940 n.5 (1963).35 We are not
willing to conclude as a matter of law that because respondent’s
determination is based on local tax assessments, it is arbitrary.
And, indeed, respondent’s determination appears reasonable and
consistent with the relative sizes of the three parcels. See
34This is especially true when there is nothing in the
record indicating that the tax-assessed value was intended to
represent fair market value. Kellahan v. Commissioner, T.C.
Memo. 1999-210; Estate of Dowlin v. Commissioner, T.C. Memo.
1994-183; see also sec. 20.2031-1(b), Estate Tax Regs.
35In 2554-58 Creston Corp. v. Commissioner, 40 T.C. 932, 940
n.5 (1963), we stated: “Although valuations for real estate
taxes may often be too low to be relied upon as furnishing the
correct value of a particular parcel of real estate as a whole,
we have no reason to reject the use of such valuations in
determining the relative value of land and buildings.”
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