- 11 - 1(b), Estate Tax Regs.); Estate of Hall v. Commissioner, 92 T.C. 312, 335 (1989). Fair market value is tested on an objective basis using a hypothetical buyer and seller and not on the basis of particular entities or individuals involved. See Estate of Andrews v. Commissioner, 79 T.C. 938, 956 (1982); Estate of Bright v. United States, 658 F.2d 999, 1005-1006 (5th Cir. 1981). The circumstances here are unconventional in several respects. Firstly, the asset in question was incomplete and under construction at the time of death. More significantly, the residence was to be restored to its prefire specifications. As we understand that concept, the cost of restoring the destroyed residence to its original vintage condition was substantially greater than the per-square-foot cost of constructing a contemporary home. In other words, there was no compulsion for the construction costs to be within boundaries that comport with resale value. That anomaly resulted in circumstances where more was being expended for construction and restoration than could possibly be realized if the structure were sold upon completion. The facts here reflect that the fair market value of the finished residence was substantially less than the cost of restoration. Finally, although the insurance company’s obligation was contractually and legally limited to the payment of up to one- half of the stated policy limit if the residence was rebuilt, the insurance company unilaterally agreed to bear the cost ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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