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this situation, the value of the gift is not the usual selling
price, but rather the amount for which the quantity of property
contributed could have been sold at the time of contribution.
It is our task in this case to match the facts against the set
of hypotheses specified by the regulations so as to determine the
fair market value of petitioner's donated bread. Fair market value
is not to be determined in a vacuum. To the contrary, it must be
determined with respect to the particular property in question at
the time of contribution, subject to any conditions or restrictions
on marketability. Cooley v. Commissioner, 33 T.C. 223, 225 (1959),
affd. per curiam 283 F.2d 945 (2d Cir. 1960). Viewing the approach
taken by the parties in presenting this case, we can perceive no
principled basis upon which we could reach a compromise value that
lies somewhere between petitioner's claim of full retail price, and
respondent's claim of 50 percent of full retail price, nor do we
think it would be appropriate to do.
We think respondent's proposed application of the regulations in
question is unduly restrictive and inconsistent with Congressional
intent. In the years at issue, petitioner contributed about 6
percent of its private label bread production to food banks.
Contributions of excess inventory that is not obsolete could seldom
be valued at full retail price under respondent's view of the
regulations because in most cases if a taxpayer could have sold
contributed excess inventory at the time and in the quantity
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