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Engineering, Inc. drilled holes in the property and its analysis
of the core samples showed that 50 acres of the property were in
the San Jacinto’s floodplain. Geotest estimated that this part
of the Hamblen Road property contained almost four million tons
of valuable deposits down to a depth of between 60 and 70 feet.
Jim pressed his son to start mining the deposits, but Dennis
resisted. They then decided to have Terrene divide the property
into three parcels--one parcel was the approximately 24 acres
that analysis had shown did not have recoverable deposits,
another was 19 acres in the floodplain that lay south of Hamblen
Road, and the third was the remaining 31 acres of floodplain
property north of the road.
Terrene donated the 19-acre parcel to the Assemblies of God
Foundation in 1997, after talking with an Assemblies of God
minister who also owned a local sand-and-gravel operation.
Before donating the parcel, Terrene had it appraised
--an appraisal that put its value at $2,500,000, which Terrene
deducted on its 1997 partnership return and which the IRS never
challenged.
This case concerns the value of the 31-acre parcel lying
north of Hamblen Road. After more fruitless attempts by Jim
Wilkerson to persuade his son to get into the mining business,
they decided to have Terrene donate this parcel to the Assemblies
of God Foundation, too. Terrene again had it appraised, and the
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Last modified: November 10, 2007