Gilmartin v. C. I. R., 111373 FEDTAX, 2884-70

Docket Nº:2884-70.
Opinion Judge:STERRETT, Judge:
Party Name:MAURICE A. GILMARTIN, JR. and NANCY W. GILMARTIN, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Attorney:Joseph Lapatin, for the petitioners. Russell F. Kurdys, for the respondent.
Case Date:November 13, 1973
Court:United States Tax Court
 
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32 T.C.M. (CCH) 1158

MAURICE A. GILMARTIN, JR. and NANCY W. GILMARTIN, Petitioners

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

No. 2884-70.

United States Tax Court

November 13, 1973

Petitioners donated real estate to a school district for which they claimed a charitable contribution deduction for the value determined by petitioners' appraiser who before being retained by the donor had made an independent appraisal of the property at the same value for the school district donee.

Held: The fair market value of the donated property determined.

Petitioners also claimed a depreciation deduction on a residence which was inherited and held for sale only. Held further: Proof of basis for depreciation is denied where based only upon a local real estate tax assessment bill of unknown date and upon a conclusion in a conference report of a revenue agent as to the amount of the depreciation deduction for a prior taxable year.

Joseph Lapatin, for the petitioners.

Russell F. Kurdys, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

STERRETT, Judge:

The respondent determined a deficiency of $6,266.34 in the Federal income taxes of the petitioners for the calendar year 1966. The issue arising out of respondent's notice of deficiency requires the determination of the fair market value of a parcel of land donated in 1966 by Nancy W. Gilmartin to a school district for purposes of computing the amount of deduction for charitable contributions the petitioners are entitled to under section 170 of the Internal Revenue Code of 1954.[1]

Additionally, on petition to the Court, the issue is presented as to the entitlement to petitioners of an allowance for depreciation in the amount of $753.25 on a residence house. No depreciation was claimed on the return with respect to the house.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. The stipulation of facts, together with the exhibits attached thereto, are incorporated herein by this reference.

The petitioners, Maurice A. Gilmartin, Jr. and Nancy W. Gilmartin (hereinafter Maurice and Nancy), are husband and wife whose legal residence at the time of filing of the petition herein was in New York, New York. For the taxable year 1966, a joint Federal income tax return was filed by petitioners with the district director of internal revenue for the Manhattan district, New York, New York.

On December 21, 1966 Nancy made a gift of land consisting of 1.399 acres in Smithtown, New York to Central School District No. 1 of the town of Smithtown, New York (hereinafter School District). Nancy inherited the 1.399 acres in issue in 1957 from her father's estate where it was valued for Federal estate tax purposes at approximately $1,900.

In 1966 the School District was considering a site for a new school. Anthony Psota (hereinafter Psota) was retained by the School District as an advisor and appraiser. Psota subsequently became, and was at the time of the trial of this case, the Regional Director of Appraisals for the General Services Administration. In due course, the site selection committee tentatively selected a location known as the Landing Meadow Road site which was comprised of the 1.399 acres considered herein and the 10.743 acres adjoining to the south owned by Richard and Elisabeth Nicodemus.

Pursuant to the request of the School District, Psota rendered a written report of appraisal dated November 9, 1966 to the School District in which he determined the fair market value of Nancy's parcel to be $19,500 and that of the Nicodemus parcel to be $59,100.

At the time of said appraisal, Psota did not know, nor did he have contact with, Maurice and Nancy and he also did not know that the 1.399 acre parcel might be the subject of a gift to the School District. In preparing this appraisal report for the School District, Psota understood that the School District planned to use it to negotiate the purchase of the properties and that, if condemnation proceedings were necessary, the School District would call on Psota to testify with respect to the value of the property as the School District's expert.

Walter R. Kiernan (hereinafter Kiernan), attorney for the School District, stated in a letter[2] to petitioners' counsel that he was of the opinion that the $19,500 value of Psota's appraisal was less than the award which the property would have brought in a condemnation proceeding if one were necessary. Kiernan also said that he was prepared to request authority from the Board of Education to exceed the appraisal value of Nancy's land since it represented frontage.

Since the School District needed Nancy's parcel for development of the school site, it sought out petitioners to discuss acquisition of that property. On November 17, 1966 Maurice met with Kiernan to discuss the property and its acquisition by the School District, this being the first time they had met since Maurice and Mancy had been out of the country for the five weeks prior to November 14, 1966. At this time, after Maurice decided he needed to know the value of the 1.399 acres, Kiernan suggested that Maurice retain Psota as his appraiser.

After a request by Maurice to render an appraisal and without any discussion as to what figure the appraisal should be, Psota...

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