- 16 -
expenses are attorney's fees, accountant's fees, and appraisal
costs which were incurred after the estate tax return was filed
to prove the shares' reported values.
Fair Market Value
Fair market value is 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. See United States v.
Cartwright, 411 U.S. 546, 551 (1973); Propstra v. United States,
680 F.2d 1248, 1251 (9th Cir. 1982); sec. 20.2031-1(b), Estate
Tax Regs. This is an objective test and requires the property to
be valued from the viewpoint of a hypothetical buyer and seller,
each of whom would seek to maximize his or her profit from any
transaction involving the property. See Propstra v. United
States, supra at 1251-1252; Estate of Jung v. Commissioner, 101
T.C. 412, 438 (1993). Profit maximization must be achieved in
the context of the market conditions and the constraints of the
economy existing at the valuation date. See Estate of Newhouse
v. Commissioner, 94 T.C. 193, 218 (1990).
For Federal estate tax purposes, the fair market value of
the subject property is generally determined as of the date of
death of the decedent; ordinarily, no consideration is given to
any unforeseeable future event that may have affected the value
of the subject property on some later date. See sec. 20.2031-
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011