Estate of Wineman v. Commissioner
Opinion
*233 Decision will be entered under Rule 155.
1. Decedent (D) gave an aggregate 24-percent interest in
her homestead property to her children. In the years following
the transfer, she continued to reside on the property. R
determined that the 24-percent interest is includable in D's
gross estate pursuant to
use of the homestead property as her residence following the
transfer of minority interests in the property to her children
was not a retained life estate in the property interests
conveyed to her children. Consequently, the value of the
minority interests is not includable in her estate under sec.
2. D rented her interests in certain real estate to Coastal
Ranches, a corporation owned by her children, at a below-market
rent. R determined that the annual difference between fair
market rent and actual rent constituted taxable gifts. HELD: R's
computation of the amount of taxable gifts sustained.
3. On its Form 706, U.S. Estate (and Generation-Skipping
*234 Transfer) Tax Return, P valued D's real estate at $ 2,261,800. R
determined that the fair market value was $ 2,785,248. HELD: The
fair market value was $ 2,417,491.
4. P elected special use valuation of certain farm real
property on its Form 706. R disallowed the election because P
failed to document comparable rental property in accordance with
elected properties under the valuation formula of sec.
Estate Tax Regs. (which provides that if an executor does not
identify comparable property and cash rentals as required by
must be valued under the rules of
may value the properties under the provisions of sec.
under
Free access — add to your briefcase to read the full text and ask questions with AI
*233 Decision will be entered under Rule 155.
1. Decedent (D) gave an aggregate 24-percent interest in
her homestead property to her children. In the years following
the transfer, she continued to reside on the property. R
determined that the 24-percent interest is includable in D's
gross estate pursuant to
use of the homestead property as her residence following the
transfer of minority interests in the property to her children
was not a retained life estate in the property interests
conveyed to her children. Consequently, the value of the
minority interests is not includable in her estate under sec.
2. D rented her interests in certain real estate to Coastal
Ranches, a corporation owned by her children, at a below-market
rent. R determined that the annual difference between fair
market rent and actual rent constituted taxable gifts. HELD: R's
computation of the amount of taxable gifts sustained.
3. On its Form 706, U.S. Estate (and Generation-Skipping
*234 Transfer) Tax Return, P valued D's real estate at $ 2,261,800. R
determined that the fair market value was $ 2,785,248. HELD: The
fair market value was $ 2,417,491.
4. P elected special use valuation of certain farm real
property on its Form 706. R disallowed the election because P
failed to document comparable rental property in accordance with
elected properties under the valuation formula of sec.
Estate Tax Regs. (which provides that if an executor does not
identify comparable property and cash rentals as required by
must be valued under the rules of
may value the properties under the provisions of sec.
under
MEMORANDUM FINDINGS OF FACT AND OPINION
MARVEL, JUDGE: Respondent determined an estate tax deficiency of $ 775,626 and an addition to tax under section 6662 of $ 3,844. After concessions, 1 the issues for decision are:
1) Whether Rebecca A. Wineman (decedent) retained a life estate
in partial interests in her homestead*236 property transferred to her
children. We hold that she did not.
2) Whether decedent rented her ranch properties to a closely
held corporation owned by her children at below-market-value rates,
thereby making taxable gifts to her children. We hold that she did.
3) Whether the cumulative fair market value of certain real
property includable in the gross estate was $ 2,261,800 as returned by
petitioner, $ 2,785,248 as determined by respondent, or some other
figure. We hold that the fair market value was $ 2,417,491.
4) Whether petitioner's election of special use valuation
qualified as a valid election under
it did.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulation*237 of facts is incorporated herein by this reference.
Rebecca A. Wineman (decedent) died on June 24, 1992 (the valuation date). Petitioner's coexecutors resided in Santa Maria, California, at the time the petition in this case was filed.
RANCH OPERATIONS
The Wineman family has been grazing cattle in the Nipomo, California, area for approximately 115 years. Decedent and her husband, Vernon Wineman (Mr. Wineman), were full-time cattle ranchers from the 1930's until their deaths. 3 Until early 1992, decedent performed numerous activities relating to the cattle operation. Her activities included feeding the cattle, deciding which breed to run, helping brand cattle, cooking for the branding crew, deciding when to buy and sell cattle and at what prices, making decisions regarding feed purchases, negotiating purchases of real estate and coordinating all the legal and sales activities for the purchases, arranging for Land Bank lending, painting and assisting in the repair and maintenance of corrals and cattle facilities, and attending bull and cattle sales in San Luis Obispo, Kern, and Santa Barbara Counties. Decedent also belonged to local and national cattle organizations.
*238 Coastal Ranches, a C corporation organized in 1979, continues the cattle operations conducted by decedent and Mr. Wineman. Decedent owned no interest in Coastal Ranches. Decedent and Mr. Wineman's three children, Dean Wineman (Dean), Eleanor Truocchio (Eleanor), and Marian Hanson (Marian), each own 21 percent of Coastal Ranches, and the remaining 37 percent is owned by Mr. Wineman's testamentary trust (the trust), of which the three children are beneficiaries. Dean and Eleanor are full-time cattle ranchers. Marian lives in Montana and occasionally participates in the cattle operation.
NIPOMO PROPERTIES
The Nipomo properties (parcels 3, 5, 6, 9, and 10) are located within the greater urban area of Santa Maria, a city at the northern end of Santa Barbara County, California. The Santa Maria area has a population of approximately 100,000. Santa Maria is primarily a farming community. Other parts of the coastal zone are more upscale, such as the Santa Ynez and Santa Ynez River Valleys to the south. Arroyo Grande, to the north and west of Santa Maria and along the Pacific coast, is the location of many second homes, attracting people seeking to escape the summer heat of the San Joaquin*239 Valley. Further north along the coast, the coastal towns of Morro Bay and Cambria are also popular with tourists. The area has attracted resort and second home development.
Although Santa Maria is within Santa Barbara County, the town of Nipomo and the Nipomo properties are in San Luis Obispo County. These properties are at the southern entrance to San Luis Obispo County. As of the valuation date, the county government intended to preserve this entrance as a scenic area that extended back almost to the first range of hills. Specifically, the San Luis Obispo County land use element in effect at the valuation date placed the ranches in the South County Planning Area. Permitted uses of properties in this area were limited to certain specified agricultural uses.
As of the valuation date, the Nipomo properties were part of an agricultural preserve and had been continuously since the early 1970's. A property is placed in an agricultural preserve by the land owner by a contract with the county. In exchange for keeping the property as rural, open space agricultural land, the land owner receives a preferential property tax rate. Each property in the agricultural preserve is encumbered by*240 a 20-year evergreen contract, which renews day to day. Under the contract, a landowner has the right to notify the county of an intent to terminate the contract on its anniversary date, and once such notice is provided, the contract will expire 20 years later. The Winemans did not provide notice of intention to terminate the evergreen contracts on the Nipomo properties at any time before their deaths.
THE HOMESTEAD PROPERTY
Decedent's homestead property (parcel 3) is the site of two residences. One is a larger house with three bedrooms. Decedent occupied one bedroom at the time of her death and had the use of the living room, kitchen, and dining area. Dean used a second bedroom as an office, where he kept his desk and all his bookkeeping papers, although he had moved out of the main house in 1979 or 1980 after his marriage. Decedent used the other bedroom as a guest bedroom, primarily for Marian when she visited from Montana. The main house also had a separate office that was the corporate headquarters for Coastal Ranches.
The second house on the homestead property is a smaller house of approximately 1,500 square feet. Dean has lived there since 1979 or 1980 as a ranch employee. *241 He has never paid rent for his use of the smaller house.
In addition to the residences, parcel 3 has two large barns, a small barn, a granary, cattle scales and corrals, a farm shop, two garages, and a small orchard.
During each of the years 1968, 1969, and 1970, decedent gave each of her three children one-third of an undivided 8-percent interest in her homestead property, for a total gift to all three children after the 3-year period of 24 percent. At the time of her death, decedent owned a 51-percent interest in the homestead property. The trust owned the remaining 25 percent.
Coastal Ranches stored hay in the barns, used the corrals and farm shop, and kept vehicles in a garage and in one of the big barns. Coastal Ranches maintained and paid utilities for the houses. Coastal Ranches also sealed the driveway, installed a sidewalk, and provided decedent with a pickup truck for her use. Workers provided by Coastal Ranches assisted with yard maintenance, including cutting down and pruning trees, repairing water pipes, and removing bushes. Coastal Ranches was also responsible for replacing fences and corrals in the event of a fire.
Some of the soil on parcel 3 was contaminated by*242 the spillage of gasoline in a refueling area near one of the barns. On February 9, 1996, NG Chemical estimated the soil remediation expenses on parcel 3 to be $ 36,256.
As of the valuation date, the fair market value of decedent's interest in the homestead property, including land, buildings, and site improvements, was $ 52,000.
THE NIPOMO PASTURELANDS
The Nipomo pasturelands consisted of Rancho El Suey (parcel 5), Rancho Nipomo (parcel 6), Lot 74 (parcel 9), and the Pit (parcel 10). As of the valuation date, all of these properties were vacant, unimproved lands used only for cattle grazing.
Decedent owned 51 percent of parcel 5, which was an oblong, irregularly shaped property consisting of 1,487 acres located on the north side of Highway 166 between Temettate Ridge and Twitchell Reservoir. On the valuation date, the property carried approximately 50 cows.
Decedent owned 50 percent of parcel 6, which was a squarish, 648-acre property situated immediately west of Temettate Ridge and parcel 5. The easternmost corner of parcel 6 adjoined the westernmost corner of parcel 5, but the properties did not otherwise share a common boundary. On the valuation date, the property carried 20-25 cows.
*243 Decedent owned 100 percent of parcel 9, which was a rectangular parcel of 90 acres, situated directly northwest of parcel 6. The longer side of the rectangle (the southeast boundary) was also the northwest boundary of parcel 6. The record does not reflect parcel 9's carrying capacity as of the valuation date.
Decedent owned 100 percent of parcel 10, a triangular parcel created by the realignment of Highway 166, which severed Parcel 10 from other Wineman properties. Parcel 10 is bisected by two ravines. At 7 acres, it is below the minimum parcel size allowed by local zoning. Thus, it would be valuable only to a neighboring landowner wishing to expand his acreage.
Average annual precipitation on the properties ranged from 14 to 18 inches. With the exception of only a few acres, the soil composition and steep slopes made the properties unsuitable for farming. A variety of factors made these ranch properties unattractive for residential development, including limited water supplies and land use restrictions. As of the valuation date, the highest and best use of these properties was their continued use as grazing land and pastureland.
As of the valuation date, the fair market values*244 of decedent's interests in the Nipomo properties were as follows:
Parcel no. Parcel name Fair market value
__________ ___________ _________________
5 Rancho El Suey $ 580,153
6 Nipomo Ranch 247,860
9 Lot 74 81,000
10 The Pit 1,750
THE MACHADO RANCH
Decedent owned a 25-percent interest in the Machado Ranch (parcel 8), which consisted of approximately 1,204 acres of unimproved grazing land located just behind the first ridge of the Santa Lucia Mountains, approximately 8 miles west of the city of San Luis Obispo. Approximately 562 acres are steep, rocky, or brushy, which limits the grazing utility of the property. The pasture quality is about average for the area. The property is perimeter fenced. However, the topography of the property makes the ranch difficult to manage. Because of the steep slopes and brushy canyons throughout the property, livestock are difficult to round up, *245 and extra labor is required to do so. As of the valuation date, the property carried 56 cows. During 1998, it was carrying about 75 cows.
Parcel 8 is zoned for agricultural use, and the zoning is burdened with a "geologic hazard" overlay. Like the Nipomo properties, Machado Ranch is in an agricultural preserve and is the subject of a 20-year evergreen contract.
The applicable land use laws permit rural residential use of the property. However, the steep terrain, rough-graded access roadway, and third-party easement rights severely restrict the desirability for residential use. The property is also situated in an area at risk for wildfires, and portions of the ranch were burned in fires during 1985 and 1994. There are no developed utilities, and the ranch roads are usable only by four-wheel-drive vehicles.
As of the valuation date, the fair market value of decedent's interest in parcel 8 was $ 231,000.
RENTAL OF DECEDENT'S RANCH PROPERTIES
During 1989, 1990, and 1991, decedent leased her interests in the ranch properties to Coastal Ranches, pursuant to oral agreements. Coastal Ranches paid decedent $ 5,000 per year during 1989 and 1990 and $ 10,000 per year during 1991 for the*246 right to graze cattle on her ranch properties. The rate of rent was not negotiated. For these years, decedent informed her children what rent she intended to charge, and the children accepted that rent without question. Decedent did not tell her children how she calculated the rent. In 1989, 1990, and 1991, the fair market rent for the ranch properties was $ 16,595 per year, net of property taxes.
Coastal Ranches contributed an unspecified amount of labor and materials in connection with its lease of decedent's ranch properties. During 1989, 1990, and 1991, Coastal Ranches paid property taxes, maintained fences, and paid utilities and other expenses associated with the Wineman properties.
In 1989, 1990, and 1991, decedent gave $ 10,000 in cash to each of her three children.
THE SPECIAL USE VALUATION ELECTION
On its Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return, petitioner claimed special use valuation for parcels 5, 6, 7, 8, and 9, pursuant to
Respondent's estate tax attorney, Patricia Hiles (Ms. Hiles), sent a letter with an attached document*247 request to the attorney for the estate on September 13, 1995. Paragraph 23 of the document request stated:
The estate has submitted a one page computation of the Special
Use Valuation which is not adequate to substantiate the special
use valuation as required by IRS Regulations. If the estate
wishes to retain the special use valuation reduction, and not
have it denied, then we will need the following within the next
60 days:
a. Who did this calculation submitted with the 706?
b. If there are any other data to support it, please submit
copies.
c. It appears that the valuation is based upon what
deceased received on her ranching operations. Please supply
copies of those leases.
d. Please comply with Regulation 20.2032A-4 (copy enclosed
for your convenience) that requires documentation which
identifies specific comparable rentals and taxes for five
years prior to date of death, arms length transactions, to
determine the net rents. (I am also enclosing*248 a copy of the
Tax Management discussion and example of how special
valuations must be done in order to qualify.) The Farm
Credit Bank rate for the Sacramento District for 1992 was
11.50%. (See copy of
cannot be "assumed".
e. If the appropriate documentation for the special use
valuation is not supplied, the $ 750,000 reduction will be
disallowed, see
At a meeting with the estate's attorney, Richard Weldon, and the coexecutors on September 21, 1995, Ms. Hiles described the requirements of electing special use valuation pursuant to
*249 The report listed 10 properties in the vicinity of decedent's ranch properties and listed the then-current rates of rent, which ranged from $ 4.50 per acre to $ 15 per acre depending upon the carrying capacity of the land. The report did not set forth the specific lease rates for any comparable properties in the 5 years preceding 1992, but stated:
Rents for the land types on the subject have been static and
current levels are representative of rents over the last five to
ten years and are considered indicative of a five year average.
The report concluded:
Parcels 5, 6, and 9 are more arid and would compete
relatively low in the range. Parcel 7, although the net grazing
land is of good quality, competes lower than Parcel 8 because
the difficulty of the terrain reduces the carrying capacity.
* * * Parcel 8 is good grazing and competes well above the
Nipomo parcels and the San Luis Obispo Ranch.
Petitioner's Special Use Valuation Report ultimately concluded that rental values for the properties were: $ 6 per acre for parcels 5, 6, and 9; $ 7 per acre for parcel 7; and $ 8 per acre for parcel*250 8.
The report stated the following information with respect to taxes:
The Williamson Act, which governs the taxing of land in Ag
Preserves, sets up a methodology for assessing land based upon
rental values and built up capitalization rates. As a result
taxes, county-wide, are based upon the average income producing
ability of like properties. Since the tax assessment methods
produce the same effect as an average, our estimate of taxes is
based upon average of the 5 years prior to 1992.
The report did not list the taxes assessed and paid on the comparable ranch properties.
In calculating the special use values for each of decedent's properties, the report multiplied the gross rental per- acre value by the number of acres, then subtracted the actual taxes for that property to arrive at the net annual rent. Each parcel's special use value was calculated by dividing net annual rental by 11.5 percent, the Farm Bank rate for June 1992 (Sacramento District). Finally, the estate's pro rata share of the special use value was calculated by multiplying each parcel's special use value by the estate's percentage ownership. According*251 to the report, the total special use value for all elected properties was $ 127,681. 4
OPINION
The first issue for decision is whether decedent retained a life interest in the partial interests in her homestead property that she gave to her children. Respondent increased decedent's gross estate by the value of a life estate in the aggregate 24-percent interest of her homestead property (parcel 3) that decedent gave to her children. Respondent asserts that the value of that interest is properly includable in decedent's gross estate pursuant to
In support of its contention that decedent retained*253 no life estate in the children's partial interests, petitioner points out that decedent used much less than 76 percent of parcel 3 and the main house. 6 Petitioner also points to Dean's testimony to the effect that no agreement existed, implied or otherwise, for decedent to retain the possession and enjoyment of the partial interests at the time she transferred those interests to her children. Respondent argues that Dean's testimony is self-serving and contrary to the objective facts and circumstances. Although Dean's testimony was clearly self-serving, we disagree with the assertion that the testimony was contrary to the objective facts and circumstances, and we ultimately agree with petitioner that decedent did not retain a life estate includable in her gross estate under
*254
A decedent's reservation of a life interest need not be provided for expressly in the instrument of transfer or enforceable under local law to be includable under
Decedent gave her children, collectively, a 24-percent interest in parcel 3. Parcel 3 consisted of just over 10 acres and had two houses, two large barns, a small barn, a granary, a farm shop, cattle scales and corrals, two garages, and a small orchard. Pursuant to its leases of decedent's properties, Coastal Ranches stored hay in the barns, used the*255 corrals and farm shop, and kept vehicles in a garage and one of the big barns. Decedent occupied the larger house, although Dean kept his desk and bookkeeping papers in one of the bedrooms and used it as an office. Another bedroom was used primarily by Marian when she visited from Montana. Coastal Ranches used an office in the main house. Dean resided in the smaller house on the homestead property. Other than the main house, decedent's personal use of parcel 3 was limited to the garden and small orchard next to the main house.
Decedent's limited personal use of the property does not prove the absence of an implied agreement. In fact, the record is silent as to whether decedent could designate who might enjoy the property. See
In contrast, where a decedent continues exclusive possession and continues to pay taxes and other property expenses after the transfer and the*256 owner of record title neither charges rent nor takes possession of the property, these facts are highly indicative of an implied agreement. See
On balance, the objective facts convince us that an implied agreement giving decedent continuing possession and enjoyment of the entire homestead property did not exist. Unlike the authority that has been cited in respondent's brief, this case involves a transfer of less than a fee simple interest in property. The majority owner's continued use and possession of real property following transfer of a minority interest is not unusual. Cf.
In addition to the objective facts, our decision rests heavily on Dean's testimony that there was no understanding between decedent and her children. While his testimony was clearly self- serving, Dean's testimony was straightforward, unequivocal, and credible. Respondent's counsel chose not to cross-examine him on this point. Because we credit his testimony, we hold that petitioner has carried its burden of proving that there was no implied agreement. Cf.
The second issue is whether decedent rented ranch property to her children at a below-market rate, thereby making a*258 taxable gift to her children. In the notice of deficiency, respondent determined that decedent had made taxable gifts to her children amounting to $ 53,784 that are properly includable in decedent's adjusted taxable gifts. Only $ 23,784 of that determination remains at issue and encompasses two types of gifts: (1) Checks of $ 10,000 delivered to each of decedent's three children and (2) below-market-value rental of decedent's ranch properties. After reducing the amount of the gifts by $ 10,000 to account for the annual exclusion, respondent determined that decedent had made taxable gifts to her children amounting to $ 5,595 in 1989, $ 11,595 in 1990, and $ 6,594 in 1991.
The parties stipulated that decedent made the first type of gifts. Respondent asserts that the information submitted by petitioner's expert on comparable rentals demonstrates that decedent's rate of rent was less than the market rate. Petitioner argues that decedent charged a market rate because Coastal Ranches paid various property-related expenses. We agree with respondent.
Petitioner's special use valuation report indicated that the annual fair market rent of decedent's pro rata interest in the parcels rented*259 to Coastal Ranches was $ 14,725. The report did not identify a fair market rent for parcel 3. Respondent estimated that the annual fair market rent of decedent's 51-percent interest in parcel 3's land and improvements (excluding the main house) was $ 1,872. 7 Respondent determined that the fair market rent of decedent's interests totaled $ 16,595, and that the difference between actual rent charged and fair market rent constituted a taxable gift. 8
It is conceded that Coastal Ranches paid property taxes and other expenses in connection with its leases of decedent's ranch properties. Dean testified that Coastal Ranches paid all the property taxes, insurance, and maintenance (collectively, the property expenses) on all the fences and ranch*260 buildings. However, petitioner was not able to establish the amounts of those expenditures. 9
Petitioner argues that the Court should estimate the amounts of the property expenses paid pursuant to the leases and thereby find that decedent charged a fair market rent. See
Petitioner contends that the rent charged by decedent corresponded to a market rate because Coastal Ranches paid many expenses associated with maintaining the properties, including property taxes. However, petitioner overlooks the fact that the fair market rental values, as calculated by petitioner's expert and used by respondent in the notice of deficiency, are net of property taxes; respondent used the net figures in computing the amount of taxable gifts. The record does not reflect amounts paid for other property- related expenses.
We need not invoke the Cohan rule when the failure to introduce documentary evidence stems from the taxpayer's own intransigence. See
The penultimate issue in this case is the determination of the fair market value of decedent's interest in the Nipomo properties. The positions of the parties and our conclusions with respect to the properties in dispute are as follows:
Petitioner's Respondent's
___________________ ____________________
Parcel Form 706 Expert Notice 1 Expert*263 Court
______ ________ ______ ______ ______ ______
5 - El Suey $ 485,000 $ 485,000 $ 732,105 $ 819,000 $ 580,153
6 - Nipomo 205,000 205,000 302,315 331,000 247,860
9 - Lot 74 65,000 65,000 76,500 108,000 81,000
10 - The Pit nominal 150 34,950 8,000 1,750
Our analysis is set forth below.
Fair market value is "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts."
The determinations of value in respondent's statutory notice of deficiency are presumptively correct. See
In support of their positions, both parties presented expert testimony. Both expert witnesses are appraisers: Leslie J. Gilman*265 (Mr. Gilman) for petitioner and David F. Hamel (Mr. Hamel) for respondent. We do not list or discuss here the qualifications of the experts, because our decision is not based on comparing qualifications, and listing them would unduly lengthen this opinion. The focus of our opinion is on the degree to which the experts' opinions are supported by the evidence.
In reviewing the conclusions of each expert, we may accept or reject expert testimony according to our own judgment, and we may be selective in deciding what parts of an expert's opinion, if any, we will accept. See
Mr. Gilman appraised decedent's real estate interests in conjunction with the filing of petitioner's Form 706. He also prepared an update of that appraisal as an expert report in conjunction with this litigation. Mr. Gilman used the sales comparison approach 11 to determine the fair market value of decedent's interest in the properties. Mr. Gilman chose nine*266 properties that he determined were comparable to the ranch properties. He also supplied sales data for two sales that occurred after his original appraisal.
Mr. Gilman or his associate, Ed Hawkes, verified each sale and personally inspected each comparable property. In his report Mr. Gilman provided the date of sale, location, price, number of acres, and price per acre of each comparable property. Prices per acre ranged from a low of $ 200 (an 11,250-acre ranch near King City, about 120 miles to the north*267 of decedent's Nipomo properties) to $ 1,100 (several properties in Santa Barbara, San Luis Obispo, and Monterey Counties). The report contained a summary description of each comparable property, with comments indicating similarities and differences between the comparable and subject properties.
Without indicating exactly what adjustments were necessary between the comparable and subject properties, Mr. Gilman concluded:
It is our opinion based on the sales data that a sales
price of $ 1,000 per acre is an appropriate estimate of value for
ranches with strong residential characteristics or ranches that
are located in areas with strong urban influence that appeals to
upscale buyers. It is our opinion that Machado Ranch fits within
this category. Because of its shape, topography, and location
the Rancho El Suey presents fewer opportunities for residential
development. The Rancho Nipomo parcels appear to offer access
difficulties and even greater topographic difficulties than the
Rancho El Suey. It is our opinion that these parcels compete
lower in the range; inferior to the sales with*268 strong
residential characteristics, but superior to the strictly
grazing properties and the parcels with the most difficult
problems. It is our opinion that the appropriate estimate of
market value for each of these parcels is $ 750 per acre.
Because of its marginal utility, it is our opinion that
* * * [parcel 10-the Pit] is of less value per acre than the
lowest priced sales. It is our opinion that the only possible
market for the parcel is a neighboring land owner. Since the
parcel would add little or no utility to the neighboring parcel,
its value is accordingly nominal.
Respondent criticized Mr. Gilman's failure to specify in his report whether an adjustment was made to comparable properties located in an agricultural preserve. Mr. Gilman's report does not indicate whether the comparable properties were in agricultural preserves; however, if they were not, a positive adjustment would have been required because a hypothetical willing buyer would likely prefer the absence of such a contractual restriction. If the comparable properties were located in agricultural preserves, no adjustment*269 would have been required. Thus, we agree with petitioner that the lack of adjustment, if any had been required, would have tended to result in an overvaluation of decedent's property interests.
After determining that the value of a fee simple interest was $ 750 per acre for the Nipomo ranch properties and $ 1,000 per acre for the Machado Ranch, Mr. Gilman proceeded to calculate the value of decedent's partial interests in the properties. He examined six sales of partial interests and determined the partial interest discount for each comparable sale. Comparing actual sale prices to the estimated pro rata share of market value, Mr. Gilman concluded that a 15- percent discount would be appropriate for decedent's 50- and 51- percent interests (parcels 5, 6, and 10), and that a 20-percent discount was appropriate for decedent's 25-percent interest in parcel 8. 12 Mr. Gilman multiplied the estimated value of a fee simple interest in each property by decedent's pro rata ownership interest and reduced the product by his indicated discount rate. We find Mr. Gilman's analysis regarding the partial interest discounts helpful and incorporate that analysis into our findings.
*270 In contrast, we do not find the portion of Mr. Gilman's report that analyzed the per-acre values of the Nipomo properties helpful. In that section, the report is far too conclusory and suffers generally from a dearth of data. While the report lists comparable properties, it lacks any detailed analysis of those properties in relationship to the subject properties. We also have concern over Mr. Gilman's choice of comparable properties. Some of the properties are hundreds of miles away from the subject properties. Although Mr. Gilman explained his selection of these properties as providing the value based on grazing use alone, i.e., the lower range of indicated value, we reject that explanation. Mr. Gilman did not select any comparable properties that would provide an upper range of indicated value, such as ranches in the Santa Ynez Valley. We are unable to determine how much weight Mr. Gilman gave the various comparable properties because of the lack of an adjustment grid. Ultimately, these flaws lead us to reject the per- acre values indicated by his report. See
Mr. Hamel*271 also used the Sales Comparison Approach to determine the fair market value of decedent's interests in the ranch properties. In contrast to Mr. Gilman, who valued each parcel individually, Mr. Hamel valued the four Nipomo properties as if they were one integrated ranch property of 2,242 acres. 13
Mr. Hamel's selection of comparable ranch properties included 12 sales occurring before the valuation date and four sales occurring within 3 years thereafter. Mr. Hamel's report contains photos of the subject and comparable properties, topographic and plat maps, and an adjustment grid reflecting adjustments for parcel size and market timing. In the text of his report, Mr. Hamel stated that he relied more heavily upon 10 of the 16 comparable sales for his opinion.
Of those 10 properties, sale prices per acre*272 ranged from $ 600 (a 3,500-acre parcel known as the Biddle Ranch, sold almost 3 years after the valuation date) to $ 1,996 (a 248-acre parcel located east of Nipomo and roughly 10 miles to the northwest of decedent's Nipomo properties). Mr. Hamel adjusted the latter sale downward by $ 500 to account for the small size of the parcel relative to the combined size of the Nipomo properties. Mr. Hamel added $ 388 per acre to the Biddle Ranch sale as a market timing adjustment. After adjustment, these properties were valued at $ 988 and $ 1,496, respectively. Similar adjustments for size and market timing were made to a few other comparables. From his data, Mr. Hamel concluded that the value of a fee simple interest in the Nipomo properties was $ 1,200 per acre.
Petitioner criticized Mr. Hamel's selection of comparable properties, claiming his selection resulted in an overestimation of the fair market value of decedent's ranch properties. We agree with this criticism. Mr. Hamel's selection of comparable properties included properties in the Santa Ynez River Valley, yet no location adjustment was indicated for those properties. In fact, no location adjustment was made for any of Mr. Hamel's*273 comparable properties, including those sold to Hollywood celebrities who presumably were not interested in using the properties for grazing. Under cross- examination, Mr. Hamel admitted that the Nipomo and Santa Maria properties had not achieved the cachet of the Santa Ynez River Valley. Inclusion of these properties, without location adjustment, leaves us with serious concerns as to Mr. Hamel's conclusions regarding market value.
Similarly, Mr. Hamel did not make any adjustment for the presence of irrigated cropland in at least one of his comparable sales, 14 nor did he make any adjustment for water supply, zoning, or topography. Other than a downward adjustment to smaller parcels, the only adjustment Mr. Hamel made to the comparables was a market timing adjustment. Although Mr. Hamel stated under cross-examination that he gave the sale containing irrigated row crops less weight in his overall analysis, his report does not so state.
*274 Respondent explains the absence of adjustments for zoning, water supply, and location by asserting that no adjustment was necessary because all the comparable properties were cattle ranches. We reject respondent's explanation because it ignores the increased value that agricultural property may derive from proximity to a metropolitan or resort area. See, e.g.,
In a similar vein, respondent defends Mr. Hamel's lack of water supply adjustment on the grounds that the subject properties all had adequate water for grazing. Because we think that a hypothetical buyer and seller would attribute a higher value to a property with good water, all other things being equal, we do not accept*275 that explanation. See
Mr. Hamel added $ 399 to $ 621 per acre (1.5 percent per month) as a market timing adjustment for those comparable properties sold after the valuation date. He based his market timing adjustment on sales in the vicinity of the subject properties and concluded that property values peaked as of June 1992. On cross-examination regarding his market timing adjustment, Mr. Hamel acknowledged that graphs from published surveys on market trends, included in the addendum to his report, indicated a somewhat different state of affairs. Despite admitting that he was probably one of the authors of the reports from which the graphs were taken, Mr. Hamel sought to discredit these graphs on the basis that they merely indicated the consensus of the five or six individuals on the various committees. After reviewing the information as presented in his report, we do not find Mr. Hamel's explanation convincing. The inconsistency causes us to question his conclusion that market values for San Luis Obispo County rangeland peaked as of the*276 valuation date, leaving us with skepticism regarding the propriety and amount of his market timing adjustment.
1. MR. HAMEL'S ADJUSTMENTS FOR DECEDENT'S PARTIAL INTERESTS
Once the per-acre value was obtained, the value of decedent's pro rata interest in each Nipomo property was obtained by multiplying the number of acres in each property by $ 1,200. The resulting figure was reduced by the percentage corresponding to decedent's pro rata ownership in each parcel. A partial interest discount was then calculated.
To calculate the amount of the partial interest discount, Mr. Hamel examined 21 sales of partial interests. He found that an inverse relationship existed between the size of the pro rata interest and the amount of the adjustment, and he predicted that smaller fractional interests would lead to larger discounts. He concluded that a discount of 10 percent was appropriate for parcels 5 and 10, of which decedent owned 51-percent interests. For parcel 6, of which decedent owned a 50-percent interest, Mr. Hamel concluded that a 15-percent discount was appropriate.
We do not agree with Mr. Hamel's conclusions regarding the appropriate discount, because we disagree with his inclusion*277 of certain data in his analysis. Some of the purportedly comparable sales of partial interests, such as the sale that indicated a 4- percent discount, resulted in the purchaser's owning a 100-percent interest. A buyer consolidating all the fractional interests is likely to pay a premium for those interests. Such a sale does not indicate the appropriate discount applicable between the hypothetical willing buyer and willing seller for a partial interest. Inclusion of those sales skewed Mr. Hamel's analysis; as a result we find Mr. Gilman's conclusions regarding the appropriate discount more reliable.
Ultimately, we find the conclusions in Mr. Hamel's report to be questionable, in light of the analytical flaws mentioned above. Mr. Hamel's use of data was incomplete and his conclusions, therefore, suspect.
Recognizing that valuation is not an exact science, see
1. PER-ACRE VALUE OF THE NIPOMO PROPERTIES
We conclude that the per-acre value of a fee simple interest in parcels 5, 6, and 9 was $ 900. This represents a 25- percent reduction from Mr. Hamel's indicated value of $ 1,200. Considering the paramount importance of location in valuing real estate, Mr. Hamel's failure to adjust for location in his report was material. Our determination of fair market values takes into account his failure to adjust for location and for differences in zoning, irrigated land, water rights, and other factors for which he should have adjusted but did not.
We conclude that the fair market value of a fee simple interest in parcel 10 was $ 1,750, or approximately $ 250 per acre. Petitioner claimed that the per-acre value of the property was approximately $ 50, while Mr. Hamel valued it at $ 1,200, the same as the other Nipomo parcels. However, in the text of his report, Mr. Hamel noted the difficulties associated with this parcel:
Parcel 10 is, in my opinion, an uneconomic remnant that was the
result of a realignment of Highway 166. Planning officials in
San Luis Obispo have stated that bisection by*279 a public road
generally does not result in the creation of a new legal parcel.
Because we think that a transaction between a hypothetical willing buyer and willing seller would factor in the possibility that land use restrictions might yield to development of parcel 10, we find that the parcel had more than nominal value. However, we cannot agree with Mr. Hamel that parcel 10 had a per-acre value equal to that of the other Nipomo properties.
2. DECEDENT'S PRO RATA INTEREST
The parties agree as to decedent's percentages of pro rata ownership of the Nipomo properties, except with respect to parcel 10. We find that decedent owned 100 percent of parcel 10. In their respective briefs, petitioner asserted that decedent's ownership was "not specified", and respondent asserted that it was 100 percent. In the statutory notice, respondent specified whether a partial interest was associated with each property and did not so specify with regard to parcel 10. In its petition, petitioner alleged that respondent erred as to his valuation of parcel 10 as follows: "i. The fair market value of a 6.99 acre parcel of land in a hole at the southwest corner of Highway 154 and Bull Canyon Road*280 * * * was $ 0.00." The record lacks any evidence that indicates that decedent owned less than a fee simple interest in parcel 10, even assuming that petitioner alleged error with respect to this issue by amended pleading. See Rule 41(b). Thus, we sustain respondent's determination of decedent's ownership interest in parcel 10, see
3. PARTIAL INTEREST DISCOUNT
Both parties agree that a partial interest discount is appropriate in this case. Their positions differ only as to the size of the discount. For parcels 5 and 6, we find that a 15-percent partial interest discount is warranted. As discussed above, in calculating the appropriate amount of the partial interest discount, we found the calculations of petitioner's expert more helpful and reliable than those of respondent's expert. Accordingly, we have used the discounts suggested by petitioner's expert in reaching our conclusion. 15 See
*281 4. CALCULATION OF THE FAIR MARKET VALUE OF DECEDENT'S
INTERESTS
We calculated the fair market values of decedent's interests in parcels 5, 6, 9, and 10 in accordance with the following formula:
Decedent's Partial
No. of FMV pro rata interest
Parcel acres X per acre X interest X discount = Total
______ ______ ________ __________ ________ _____
5 1,487 $ 900 .51 .85 $ 580,153
6 648 900 .50 .85 247,860
9 90 900 1.00 1.00 81,000
10 7 250 1.00 1.00 1,750
The last issue for decision concerns petitioner's election to value the interests in certain ranch properties under
*283
The requirements for a valid
In general, estates that make timely elections that fail to contain all required information have 90 days to provide the missing information after notification of the defects. See
Respondent sought to exclude two documents pertaining to petitioner's
By letter dated September 13, 1995, respondent's estate tax attorney, Ms. Hiles, notified the executors that the estate's computation of special use valuation was inadequate because the documentation submitted did not identify "specific comparable rentals and taxes for five years prior to date of death, arms length transactions to determine the net rents" as required by
On August 6, 1998, Reeder, Gilman & Associates completed an update to its special use valuation report of December 12, 1995 (hereinafter Exhibit 29). Obviously, Exhibit 29 was submitted well beyond the 90-day curative period, which ended on December 12, 1995.
Before 1997, the availability of the 90-day curative period depended upon the estate's substantial compliance with the regulations. See
*286 There is no dispute that petitioner timely submitted the recapture agreement described in
Only one of the requirements for a valid
(7) Method of valuing farms. --
(A) * * * the value of a farm for farming purposes
shall be determined by dividing --
(i) the excess of the average annual gross cash
rental for comparable land used for farming purposes
and located in the locality of such farm over the
average annual State and local real estate taxes for
such comparable land, by
(ii) the average annual effective interest rate
for all new Federal Land Bank loans.
For purposes of the preceding sentence, each average annual
computation shall be made on the basis of the 5 most recent
*288 calendar years ending before the date of the decedent's death.
* * * * * * *
(C) Exception. -- The formula provided by subparagraph
(A) shall not be used --
(i) where it is established that there is no
comparable land from which the average annual gross
cash rental may be determined * * *, or
(ii) where the executor elects to have the value
of the farm for farming purposes determined under
paragraph (8).
Petitioner maintains that its special use valuation report provided sufficient information to satisfy
1. SECTION 2032A(e)(7)
The regulations interpreting
(1) Subtracting the average annual state and local*289 real
estate taxes on actual tracts of comparable real property in the
same locality from the average annual gross cash rental for that
same comparable property, and
(2) Dividing the results so obtained by the average annual
effective interest rate charged on new Federal land bank loans.
The first issue we must decide is whether petitioner complied with paragraph (1), above. It is undisputed that petitioner did not submit information on property taxes on comparable properties. Petitioner asserts that this lack of information should not invalidate its election because the omission has not operated to respondent's detriment. Respondent does not address this argument squarely but maintains that the omission of property tax information is fatal to the election.
Petitioner makes a creative, if not entirely convincing, argument. Information on property taxes is a required element of the capitalization of rents formula. See
In order to measure the special use value of a farm under
Petitioner's special use valuation report, submitted on December 12, 1995, within the 90-day period, provided current lease information on 10 comparable properties and stated that "Rents for the land types on the subject have been static and current levels are representative of rents over the last five to ten years and are considered indicative of a five year average."
Petitioner argues that it complied with the regulations because the assertion that rents were static rendered unnecessary any separate listing of actual rents during 1987-91. However, the language of the*292 report belies petitioner's claim that the current rents on each property were static. Regarding rents, the report asserts that "rental levels are * * * indicative of a five year average." Thus, the report does not indicate the actual cash rentals of comparable real property for the period 1987-91. Instead, the report provides actual cash rentals of 10 comparable properties for 1995 and an impermissible appraisal asserting that the 1995 rental values were indicative of the 1987-91 rental values. See
2. SECTION 2032A(e)(8)
Petitioner maintains, in the alternative, that it was entitled to value the properties under
a.
The first issue is whether petitioner elected to value the property under
*294 Respondent's argument rests upon
In this case, petitioner has not proven that there was no comparable land from which the average annual gross cash rental may be determined within the meaning of
By regulation, the Secretary has determined that "If the executor does not identify such [actual comparable] property and cash rentals, all specially valued real property must be valued under the rules of
On brief, respondent does not address the plain language of the regulation. Instead, respondent argues that allowing petitioner to value the properties under a different method of election than originally elected should be precluded, as it would purportedly encourage other taxpayers to play the audit lottery. Respondent also asserts that the default election is foreclosed by case law.
We fail to see how allowing an estate to use the special use method of
Relying upon
Contrary to respondent's assertion, we did not decide that failure to document comparable properties precluded a default election to value property under*297
In Estate of Strickland, we did not need to decide the meaning of
We hold that petitioner's special use valuation election encompassed the right to value the property under
b. SPECIAL USE VALUATION UNDER
(8) Method of valuing closely held business interests, etc.
-- In any case to which paragraph (7)(A) does not apply, the
following factors shall apply in determining the value of any
qualified real property:
(A) The capitalization of income which the property
can be expected to yield for farming or closely held
business purposes over a reasonable period of time under
prudent management using traditional cropping patterns for
the area, taking into account soil capacity, terrain
configuration, and similar factors,
(B) The capitalization of the fair rental value of the
land for farmland or closely held business purposes,
(C) Assessed land values in a State which provides a
*300 differential or use value assessment law for farmland or
closely held business,
(D) Comparable sales of other farm or closely held
business land in the same geographical area far enough
removed from a metropolitan or resort area so that
nonagricultural use is not a significant factor in the
sales price, and
(E) Any other factor which fairly values the farm or
closely held business value of the property.
The statute clearly provides that all factors shall apply, joining them with the conjunction "and". See
In Estate of Hughan, the estate's
In Estate of Hughan, the parties agreed that the valuation was to be governed by the method of valuation described in
In contrast to Estate of Hughan, and as discussed in detail above, respondent did not apply
Having failed to persuade us that petitioner made no election under
Respondent's principal*304 arguments before the submission of his posttrial briefs were threefold:
(1) Petitioner failed to satisfy the requirements of
(2) petitioner failed to elect special use valuation under
(3) even if petitioner is deemed to have elected special use valuation under
We reject respondent's substantive challenge to petitioner's
*306 In this case, respondent gave the required notice and opportunity to cure to petitioner but only with respect to petitioner's election under
To satisfy the requirements of
By amending and*307 broadening the scope of
In this case, petitioner had no notice that respondent was challenging the adequacy of petitioner's election under
We conclude that when it enacted and amended
We uphold petitioner's
We have carefully considered the remaining arguments*310 of both parties for results contrary to those expressed herein, and, to the extent not discussed above, find those arguments to be irrelevant, moot, or without merit.
To reflect the foregoing and concessions by both parties,
Decision will be entered under Rule 155.
Footnotes
1. The parties conceded several items in a stipulation of agreed adjustments, filed Sept. 14, 1998. Petitioner's concessions are described therein and will not be repeated here. Respondent has conceded that petitioner is not liable for the addition to tax. On brief, respondent conceded that the fair market values of decedent's interests in two parcels of estate property, the Homestead (parcel 3) and the Machado Ranch (parcel 8), were $ 52,000 and $ 231,000, respectively.↩
2. All section references are to the Internal Revenue Code as in effect for the date of decedent's death, and all Rule references are to the Tax Court Rules of Practice and Procedure. All monetary amounts have been rounded to the nearest dollar.↩
3. Mr. Wineman died on Jan. 22, 1962.↩
4. Petitioner's report uses the figure $ 127,936, which included $ 255 attributable to parcel 10, although petitioner did not elect special use valuation for parcel 10 on its Form 706.↩
5. The pertinent part of
sec. 2036 provides:SEC. 2036 . TRANSFERS WITH RETAINED LIFE ESTATE.(a) General Rule. -- The value of the gross estate shall
include the value of all property to the extent of any interest
therein of which the decedent has at any time made a transfer
(except in case of a bona fide sale * * *), by trust or
otherwise, under which he has retained for his life or for any
period not ascertainable without reference to his death or for
any period which does not in fact end before his death --
(1) the possession or enjoyment of, or the right to
the income from, the property, or
(2) the right, * * * to designate the persons who
shall possess or enjoy the property or the income
therefrom.↩
6. Petitioner's argument implies that decedent owned 76 percent of the homestead property. However, the parties stipulated that decedent owned 51 percent. At trial, Dean testified that his father's testamentary trust owned the remaining 25 percent.↩
7. The difference between the sum of these figures, $ 16,597, and the figure used in the notice, $ 16,595, is unexplained.↩
8. The parties stipulated that decedent rented the ranch lands, in toto, to Coastal Ranches for $ 5,000 in 1989, $ 5,000 in 1990, and $ 10,000 in 1991.↩
9. Petitioner failed to share the salient documents with respondent's counsel 15 days before trial, as required by the Court's Standing Pre-Trial Order. Respondent objected to a question put to Dean regarding the amounts of property-related expenses, on the grounds that the records themselves were the best evidence of the expenses. We sustained the objection. Because the records had not been exchanged 15 days before trial as required by the Court's Standing Pre-Trial Order, we also sustained respondent's objection to petitioner's introduction of the records themselves into evidence.↩
10. A computational adjustment will be required to give effect to the parties' stipulation regarding decedent's cash gifts. The parties stipulated that decedent gave $ 10,000 in cash to each child in 1989, although the taxable gifts adjustment in the notice of deficiency was based on a determination that decedent made an $ 8,000 gift to each child in that year. The stipulated figure is given binding effect. See Rule 91(e).↩
1. Statutory Notice of Deficiency.↩
11. The sales comparison approach, also known as the comparable sales or market data approach, is "'generally the most reliable method of valuation, the rationale being that the market place is the best indicator of value, based on the conflicting interests of many buyers and sellers.'"
Estate of Spruill v. Commissioner, 88 T.C. 1197, 1229 n.24 (1987) (quotingEstate of Rabe v. Commissioner, T.C. Memo 1975-26 , affd. without published opinion566 F.2d 1183↩ (9th Cir. 1977)) .12. Mr. Gilman's analysis that a partial interest discount was warranted for parcel 10 was predicated on his assumption that decedent owned 51 percent of that property. As discussed infra sec. III.D.2, on the record before us, we find that decedent owned 100 percent of parcel 10.↩
13. Petitioner did not criticize Mr. Hamel on this point. We treat this as a concession that the integrated ranch approach is appropriate in this case for the Nipomo properties, with the exception of parcel 10.↩
14. Interestingly, Mr. Hamel had adjusted for the presence of the irrigated cropland in a sales data sheet prepared in 1991 while he was employed by Reeder, Gilman & Associates.↩
15. Respondent's expert also concluded that decedent's 50- percent interest in parcel 6 warranted a 15-percent partial interest discount.↩
16. Sec. 501(b) of the Taxpayer Relief Act of 1997, Pub. L. 105-34, 111 Stat. 846, amended
sec. 2032A(a) to provide an adjustment for inflation, effective for estates of decedents dying after Dec. 31, 1997. As decedent died before the effective date, the adjustment for inflation is not applicable. businesses. SeeEstate of McAlpine v. Commissioner, 96 T.C. 134, 139 (1991) , affd.968 F.2d 459↩ (5th Cir. 1992) .17.
Sec. 2032A(d)(3) provides:SEC. 2032A(d) . Election; Agreement. --* * * * * * *
(3) Modification of election and agreement to be permitted.
-- The Secretary shall prescribe procedures which provide that
in any case in which --
(A) the executor makes an election under paragraph (1)
within the time prescribed for filing such election, and
(B) substantially complies with the regulations
prescribed by the Secretary with respect to such election,
but --
(i) the notice of election, as filed, does not
contain all required information, or
(ii) signatures of 1 or more persons required to
enter into the agreement described in paragraph (2)
are not included on the agreement as filed, or the
agreement does not contain all required information,
the executor will have a reasonable period of time (not
exceeding 90 days) after notification of such failures to
provide such information or agreements.↩
18. Congress intended that, "with respect to technically defective 2032A elections made prior to the date of enactment, prior law should be applied in a manner consistent with the provision." H. Conf. Rept. 105-220, at 720 (1997).↩
19. Information on property taxes may serve to substantiate the gross cash rental figures used in the calculation, because some rough proportionality between the figures would normally be expected.↩
20. Respondent's position on brief contradicts the position taken in a motion in limine. In that motion, respondent stated as follows:
Even though an estate initially has elected to value farm
property pursuant to
section 2032A(e)(7) , the estate can stillavail itself of the special use valuation provided under I.R.C.
section 2032A(e)(8) .Section 20.2032A-4(2)(i) , Estate Tax Regs.states, in part, "[i]f the executor does not identify such
property and cash rentals, all specially valued real property
must be valued under the rules of
section 2032A(e)(8) if specialuse valuation has been elected." Therefore, if the estate
attempts to comply with
section 2032A(e)(7) but fails toidentify the comparable property and cash rentals, the estate
may qualify under
section 2032A(e)(8) , PROVIDED THE INFORMATIONSUBMITTED BY THE ESTATE SUBSTANTIALLY COMPLIES WITH THE
REQUIREMENTS OF THE REGULATIONS. * * *
Respondent subsequently conceded on brief that whether petitioner substantially complied with the requirements of
sec. 2032A↩ and related regulations is no longer an issue.21. In
Estate of Hughan v. Commissioner, T.C. Memo 1991-275 , documentation with respect to thesec. 2032A(e)(8) valuation was presented and relied upon after the notice of election was filed. For example, the expert witness reports bearing on the farmland's value undersec. 2032A(e)(8)↩ that were introduced into evidence at trial were dated between 2 and 4 weeks prior to the date of trial.22. In general, when Congress requires the Secretary to prescribe regulations implementing taxpayer-friendly statutory provisions and the Secretary has not yet acted, this Court has held that the statute's operation is not conditioned upon the issuance of regulations. See
Hillman v. Commissioner, 114 T.C. 103, 2000 U.S. Tax Ct. LEXIS 12, 114 T.C. No. 6 (2000) ;Estate of Maddox v. Commissioner, 93 T.C. 228, 233-234 (1989) ;First Chicago Corp. v. Commissioner, 88 T.C. 663, 676-677 (1987) , affd.842 F.2d 180 (7th Cir. 1988) ;Occidental Petroleum Corp. v. Commissioner, 82 T.C. 819, 829↩ (1984) .23. See Taxpayer Relief Act of 1997, Pub. L. 105-34, sec. 1313(a), 111 Stat. 1045; Deficit Reduction Act of 1984, Pub. L. 98- 369, sec. 1025(a), 98 Stat. 1030; Economic Recovery Tax Act of 1981, Pub. L. 97-34, sec. 421(j)(3), 95 Stat. 313.↩
2000 T.C. Memo. 193 (Estate of Wineman v. Commissioner) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.