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OPINION
I. Value of the Canal
A. Background
Section 170(a)(1) provides: “There shall be allowed as a
deduction any charitable contribution * * * payment of which is
made within the taxable year. A charitable contribution shall be
allowable as a deduction only if verified under regulations
prescribed by the Secretary.” Where the charitable contribution
consists of property other than cash, the value of the
contribution, with exceptions not relevant here, is the fair
market value of the donated property at the time of contribution.
See sec. 1.170A-1(c)(1), Income Tax Regs.; see also Hewitt v.
Commissioner, 109 T.C. 258, 261 (1997), affd. 166 F.3d 332 (4th
Cir. 1998). The regulations define fair market value as “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 also Johnson
v. Commissioner, 85 T.C. 469, 476 (1985). Valuation is a
question of fact. See, e.g., Estate of Newhouse v. Commissioner,
94 T.C. 193, 217 (1990). The parties agree that a deduction in
the instant case is permitted and that the only issue is the fair
market value of the contributed property.
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Last modified: May 25, 2011