Terrene Investments, Ltd., Deerbrook Construction, Inc., Tax Matters Partner - Page 9




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          and-gravel property in turn forces us to estimate a number of               
          factors:                                                                    
               • total volume of minerals on the property,                            
               • setbacks,                                                            
               • size of work area,                                                   
               • slope of pit walls,                                                  
               • natural waste,                                                       
               • rate of extraction,                                                  
               • royalty rate,                                                        
               • discount rate, and                                                   
               • residual value.                                                      
          A.   Parties’ Positions                                                     
               The Commissioner’s proposed value of $301,000 is based on              
          the work of its expert, Edwin Moritz.  Moritz is a member of the            
          American Institute of Minerals Appraisers and the Society of                
          Petroleum Engineers, and has appeared as an expert witness on the           
          FMV of sand-and-gravel properties in other courts.  He relies on            
          the Uniform Standards for Professional Appraisers Practice                  
          (USPAP), the Uniform Appraisal Standards for Federal Land                   
          Acquisitions (UASFLA), and caselaw for the proposition that the             
          comparable-sales approach is best.  See Cloverport Sand & Gravel            
          Co. v. United States, 6 Cl. Ct. 178, 189 (1984).  After searching           
          the deed records in the county where the Hamblen Road property is           
          located, Moritz identified five sales that he said were possibly            
          comparable.  Moritz interviewed the buyers and sellers in each of           
          these transactions and concluded that three of them were in fact            
          comparable.  He adjusted the prices involved to account for                 
          various differences with the Hamblen Road property and then used            







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