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he customarily sells, but if he sells only at retail the
usual market consists of his retail customers.
(3) If a donor makes a charitable contribution of
property, such as stock in trade, at a time when he could
not reasonably have been expected to realize its usual
selling price, the value of the gift is not the usual
selling price but is the amount for which the quantity of
property contributed would have been sold by the donor at
the time of the contribution.
In the case before us, petitioner argues that it could have sold
to its regular customers at full retail prices the same quantity of
bread that it donated to food banks. Respondent argues that the
donated bread was surplus inventory that petitioner could have sold
only at a 50-percent discount, which would have brought the selling
price below petitioner's adjusted basis.
Section 1.170A-1(c)(2), Income Tax Regs., after reciting the
familiar general definition of "fair market value," provides the
method for establishing fair market value in the case of donated
inventory. Under the regulation, the fair market value is the price
which the taxpayer would have received "if he had sold the
contributed property in the usual market in which he customarily
sells," in the quantity contributed. Sec. 1.170A-1(c)(2), Income
Tax Regs. If the taxpayer sells only at retail (as here), the
"usual market" consists of the taxpayer's retail customers.
Section 1.170A-1(c)(3), Income Tax Regs., limits the scope of
the preceding section in those cases where it cannot be established
that the taxpayer could have realized his usual selling price. In
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