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Respondent's contention that the purchase of the gemstones
was not an arm's-length transaction is not supported by the
record. Mr. Hemmings and Don were no more than business
acquaintances, and there is no reason to believe that either
intended to confer any benefit on the other by paying more or
less than the fair consideration in the exchange.
Turning to the proximity of the purchase date to the date of
gift, in Tripp v. Commissioner, 337 F.2d 432, 434 (7th Cir.
1964), affg. T.C. Memo. 1963-244, the court found that the
purchase price of jewelry over 2 years prior to the contribution
was sufficient to establish the fair market value of the jewelry
on the date of contribution in the absence of convincing evidence
to the contrary. In Jayson v. United States, 294 F.2d 808, 810
(5th Cir. 1961), the court found that the purchase price of land
3-1/2 years prior to its condemnation was evidence of its fair
market value on the date of condemnation. Similarly, in United
States v. 2,635.04 Acres of Land, 336 F.2d 646, 649 (6th Cir.
1964), the court held that a comparable sale of land in 1954
constituted evidence of the fair market value of the land
condemned in 1961.
Respondent has not introduced any evidence of the fair
market value of the gemstones on the date of contribution, nor
put forth any reason to believe the value of the gemstones
diminished between the date of purchase and the date of
contribution. Gemstones are durable assets, not easily
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