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when a taxpayer deliberately overvalues property with an eye
towards tax evasion, or attempts to conceal taxable assets from
the reach of the Commissioner.
Property includable in a decedent's gross estate is included
at its fair market value on either: (1) The date of the
decedent's death or (2) the alternate valuation date described in
section 2032. 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 to sell and
both having reasonable knowledge of relevant facts". Sec.
20.2031-1(b), Estate Tax Regs.; see also secs. 2031(a), 2032(a);.
Fair market value is a factual determination, and the trier of
fact must weigh all relevant evidence of value and draw
appropriate inferences. Commissioner v. Scottish Am. Inv. Co.,
323 U.S. 119, 123-125 (1944); Helvering v. National Grocery Co.,
304 U.S. 282, 294 (1938). Respondent's determination of fair
market value is presumed correct, and the taxpayer must prove it
wrong. Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933).
An actual arm's-length sale of property is most indicative
of its fair market value, assuming that the date of the sale is
close to the valuation date. See Ward v. Commissioner, 87 T.C.
78, 101 (1986); Estate of Andrews v. Commissioner, 79 T.C. 938,
940 (1982). If actual sales are not available, fair market value
is determined based on a hypothetical willing buyer and a
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