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Respondent does not claim that any amounts allocable to accrued
interest are items of omitted gross income.
B. Amount Realized on Disposition of 1987 Ampel Notes
Respondent argues that petitioner received both cash and
property on the disposition of the 1987 Ampel notes. The parties
agree that petitioner received cash of $201,158.86. Respondent
argues that the fair market value of the Floridama note on
March 2, 1989, was not less than its face amount, viz,
$19.3 million. Petitioner argues that it was $7 million. We
find that the fair market value of the Floridama note on March 2,
1989, was $7 million.
Fair market value is "the price at which the 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." Sec. 1.170A-1(c)(2),
Income Tax Regs; see McShain v. Commissioner, 71 T.C. 998, 1004
(1979). Determining the fair market value of a long-term
installment obligation is a question of fact. Riss v.
Commissioner, 368 F.2d 965, 970-971 (10th Cir. 1966), affg.
T.C. Memo. 1965-198.
Neither party offered expert testimony as to the value of
the Floridama note. Petitioner testified that the “cash value”
of the Floridama note--the value a willing buyer would pay a
willing seller--of the Floridama note was $7 million. Petitioner
was a credible witness, knowledgeable about real estate in
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