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Petitioner and the amici curiae cite numerous cases in
support of their argument that a fair market valuation of
property generally should not take into account subjective
factors (such as the intended use of the property). Properly
read, however, the cases cited do not stand for the proposition
that all subjective elements in a transaction (such as the intent
of the parties and the purpose for the transaction) should be
disregarded in determining fair market value. Rather, the cases
cited stand for the limited proposition that blatantly self-
serving, subjective testimony and evidence offered in an attempt,
after the fact, to revalue a transaction contrary to its
recognized market value will be rejected.
In Rooney v. Commissioner, 88 T.C. 523, 527 (1987), because
of alleged subjective “circumstances [that] compelled * * * [the
taxpayers] to accept * * * goods and services at prices higher
than they would otherwise pay”, the taxpayers attempted to value
the goods and services at less than the recognized market value
therefor. The Court in Rooney rejected this argument, stating
that “petitioners may not adjust the acknowledged retail price of
the goods and services received merely because they decide among
themselves that such goods and services were overpriced". Id. at
528; accord Baker v. Commissioner, 88 T.C. 1282, 1289 (1987).
The taxpayer's argument in Koons v. United States, 315 F.2d
542 (9th Cir. 1963), perhaps best reflects petitioner’s argument
in this regard. In Koons, an employer paid moving expenses of
the taxpayer. The taxpayer conceded that the value of the moving
services was includable in his gross income but attempted to
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