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to remain abreast of the competition, so it stands to reason that
petitioner would try to avoid getting a reputation for selling stale
bread by leaving it on the shelves longer than its competition did.
The parties stipulated that regional and national bakers that
have a substantial share of the California pan bread market sell
their bread, after it is pulled from the shelves, at thrift or
bakery outlets at discounts ranging from 20 to 70 percent.
Undoubtedly petitioner could have sold its bread at thrift outlets
had it chosen to do so, but this fact does not establish that
petitioner could not sell its 4-day bread at regular retail prices.
At best it merely tends to show that petitioner could have sold
"old" bread at a discount when it had in effect announced to the
public that the bread being offered at a discount was old.
Respondent points to the general definition of fair market value
contained in the first sentence of section 1.170A-1(c)(2), Income
Tax Regs., and argues that 4-day bread could not have been sold to
"fully informed consumers," that common sense forces the conclusion
that the Sunday sales were the product of "ignorance on the part of
the customer," and "compulsion; i.e., the older bread was all that
was left and the customer had no other choice." But by focusing
solely on the first sentence of the regulation, as respondent has
done, it is necessary to disregard the rest of the regulation which,
as we have already pointed out, provides the specific method by
which fair market value is determined in the context of contributed
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