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412, 431 (1993); Estate of Gilford v. Commissioner, 88 T.C. 38,
52 (1987); Hess v. Commissioner, T.C. Memo. 2003-251. These
events can be helpful in valuing assets if they shed light on the
expectations that a hypothetical willing buyer and seller might
have reasonably entertained at the valuation date. Estate of
Bailey v. Commissioner, T.C. Memo. 2002-152. Petitioner’s expert
at trial, Mr. Lloyd, contended that as of the valuation date, the
purchase of petitioner’s water right by the LCRA was
unforeseeable to the hypothetical willing seller and buyer.
Respondent contends that it was foreseeable that the LCRA would
eventually purchase the water right; the question was simply when
and at what price. Respondent also asks us to accept as evidence
of his valuation the facts surrounding the closings of the Corpus
Christi transaction and the LCRA’s purchase of the water right in
January 1999. See, e.g., Estate of Jung v. Commissioner, supra
at 431. We shall examine the factors affecting each component of
the water right to determine to what extent the subsequent events
were foreseeable. Set forth below is a time line of the events
relevant to our determination in this case.
Event Date
LCRA discusses purchase of 1967, 1972
water right with petitioner
San Antonio and petitioner 1991
discuss a possible purchase
of a portion of petitioner’s
water right
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