Alleged Errors of Omission by Appraisers
This chapter highlights alleged errors that have appeared in reported federal tax court decisions. The purpose of identifying these errors (or alleged errors as the case may be) is to allow appraisers and appraisal report users alike an awareness of the controversies surrounding numerous alleged errors. An awareness of and a proactive recognition of the various appraisal methods, treatments, and adjustments allows appraisers and appraisal stakeholders the opportunity of assessing the ramifications of such court decisions. It is important to note that there are always two sides to every story, and courts do not always get it right. For this reason, we have made a conscious decision to not name any appraisers in this analysis. We did not want to single out any appraiser because the errors and the subject matter themselves are far more instructive. Lest we not add to the confusion or controversy, we use the courts’ own words in many instances because they say it better than we could have.
The court's first objection to appraisals is an overarching concern that there are diminishing returns in extensive numerical analyses in the appraisal process and that, no matter how the appraisal is fashioned, it has many areas for subjective determination along the way, which culminates in a subjective opinion. Consider what the U.S. Fifth Circuit wrote in Dunn Est. v. Comr.:1
As the methodology we employ today may well be viewed . . . as unsophisticated, ...