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The fair market value of real property is based on
the highest and best use to which the property could be
put on the date of valuation. See, e.g., Frazee v.
Commissioner, 98 T.C. 554, 563 (1992); Symington v.
Commissioner, 87 T.C. 892, 896 (1986); Stanley Works v.
Commissioner, 87 T.C. 389, 400 (1986). Generally, the
highest and best use of a parcel of property is the
reasonable and probable use of the property that supports
the highest present value. See Frazee v. Commissioner,
supra at 563; Symington v. Commissioner, supra at 896-897.
In determining the highest and best use of the property,
it is necessary to consider the realistic, objective
potential uses for which the property is adaptable and
needed or likely to be needed in the foreseeable future.
See Stanley Works v. Commissioner, supra at 400. See
generally Olson v. United States, 292 U.S. 246, 255-256
(1934).
In the process of establishing the fair market value
of an item of property on the basis of its highest and
best use, it is sometimes necessary to consider the most
appropriate market through which the property would change
hands from a willing seller to a willing buyer. See,
e.g., Akers v. Commissioner, 799 F.2d 243 (6th Cir. 1986),
affg. T.C. Memo. 1984-490; Anselmo v. Commissioner, 757
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