Opinion ID: 403845
Heading Depth: 3
Heading Rank: 1

Heading: Tax Court's Determination As To Fair Market Value

Text: 6 Taxpayers do not disagree with the tax court's reading of Franklin, 544 F.2d at 1045. Instead they argue that the tax court incorrectly interpreted various stipulations regarding the fair market value of the properties in question. Taxpayers contend that the fair market value of the property actually approximated the purchase price primarily because of CAL-AM's promise to develop the property for the benefit of the partnerships. At trial, Taxpayers attacked the appraiser's expertise, methodology and conclusions, particularly his omission of CAL-AM's development obligation from his analysis. 7 We reject each of Taxpayers' contentions. The tax court's determination that the fair market value of the properties far exceeded the purchase price was based on competent and substantial evidence. This was a factual determination. Thompson v. Commissioner, 631 F.2d 642, 646 (9th Cir. 1980), cert. denied, 452 U.S. 961, 101 S.Ct. 3110, 69 L.Ed.2d 972 (1981). Factual findings by the tax court are not overturned on appeal unless clearly erroneous. Geneva Drive In Theatre, Inc. v. Commissioner, 622 F.2d 995, 996 (9th Cir. 1980). The tax court in the matter before us found that the appraisals which valued the properties at some $800,000 below the purchase price reflected the properties' true fair market value. The appraiser had been in the business of making independent real estate appraisals in the area for over twenty-five years. He valued the properties by considering some 150 comparable properties in the vicinity sold during 1970-1977. He also contacted governmental agencies to obtain zoning information, building permits and utility information. He spoke to real estate brokers, investors and other individuals knowledgeable in the market. 8 The tax court found no enforceable promise or commitment obliging CAL-AM to develop the property, and that its statements in that regard were merely sale-type puffery. The tax court also found that none of the alleged methodological errors would bring the properties' fair market value close to the large purchase price paid by the limited partnerships. The tax court's findings as to fair market value were not clearly erroneous. 9