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The parties do not dispute that the sale of the Property, if
found to be below FMV, results in additional income to both the
Corporation and the Laniers. (In that respect, the Laniers do
not deny that the Corporation had adequate earnings and profits
to support the finding of a dividend in the amount determined by
respondent.) The principal issue, therefore, is primarily
factual; i.e., whether or not the FMV of the Property as of March
31, 1987, exceeded its purchase price of $425,000.
FMV has been defined as the price at which property would
change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell and both having
reasonable knowledge of relevant facts. United States v.
Cartwright, 411 U.S. 546, 551 (1973); Marine v. Commissioner, 92
T.C. 958, 982 (1989), affd. without published opinion 921 F.2d
280 (9th Cir. 1991); see sec. 1.170A-1(c)(2), Income Tax Regs.
The FMV of property is based upon the "highest and best use" of
the property as of its relevant valuation date. Stanley Works &
Subs. v. Commissioner, 87 T.C. 389, 400 (1986); see Hilborn v.
Commissioner, 85 T.C. 677, 689 (1985). The determination of the
FMV of property is a question of fact which must be resolved
after consideration of all of the evidence in the record. Morris
v. Commissioner, 761 F.2d 1195, 1200 (6th Cir. 1985), affg. T.C.
Memo. 1982-508; Jarre v. Commissioner, 64 T.C. 183, 188 (1975);
Kaplan v. Commissioner, 43 T.C. 663, 665 (1965).
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