- 24 -
dispute that the below-market rent is a taxable gift under
section 2503, respondent is sustained on this issue.10
III. Fair Market Value of Decedent's Real Estate
A. Introduction
The penultimate issue in this case is the determination of
the fair market value of decedent's interest in the Nipomo
properties. The positions of the parties and our conclusions
with respect to the properties in dispute are as follows:
Petitioner's Respondent's
Parcel Form 706 Expert Notice1 Expert Court
5 - El Suey $485,000 $485,000 $732,105 $819,000 $580,153
6 - Nipomo 205,000 205,000 302,315 331,000 247,860
9 - Lot 74 65,000 65,000 76,500 108,000 81,000
10 - The Pit nominal 150 34,950 8,000 1,750
1Statutory Notice of Deficiency.
Our analysis is set forth below.
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.” United States v.
Cartwright, 411 U.S. 546, 551 (1973); sec. 20.2031-1(b), Estate
Tax Regs. The willing buyer and the willing seller are purely
10A computational adjustment will be required to give effect
to the parties’ stipulation regarding decedent’s cash gifts. The
parties stipulated that decedent gave $10,000 in cash to each
child in 1989, although the taxable gifts adjustment in the
notice of deficiency was based on a determination that decedent
made an $8,000 gift to each child in that year. The stipulated
figure is given binding effect. See Rule 91(e).
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011