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the $203,000 sale price for the South Dakota property between the
residence and the workshop.
Respondent urges us to apportion the sale proceeds of the
South Dakota property by square footage; because the workshop was
approximately 9 percent of the home’s overall square footage,
respondent suggests that we should allocate 9 percent of the
home’s sale price to the workshop. However, given that workshop
space is not as valuable as living space in a home, we decline to
use respondent’s calculation method.
Petitioners, on the other hand, urge us to assign $4,000 of
the sale price to the workshop. They arrive at this number by
calculating the difference between the 1998 appraisal of $199,000
and the 2001 sale price of $203,000; in other words, petitioners
attribute the entire increase in the home’s value between 1998
and 2001 to the workshop. They contend that all of the increase
must have been a result of the workshop as that was the only
thing that changed in the period between appraisals. We disagree
with petitioners’ argument.
Rather than use either of the parties’ methods to allocate
the proceeds from the sale of the South Dakota property between
the residence and the workshop, we shall use the only allocation
approach supported by the record; i.e., taking the average of the
appraisals of the workshop value used for the 2001 sale. This
approach may be an imperfect solution given the fact that the
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Last modified: March 27, 2008