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There is nothing in the record of either of the
subject cases to suggest that the business interests of
EPIC and both limited partnerships were not adverse to the
business interests of each of the five developers, nor is
there anything to suggest that EPIC and the partnerships
did not deal with those companies at arm's length.
Respondent does not suggest otherwise. In asserting that
"the transactions * * * involved related parties",
respondent focuses on EMI, the company affiliated with EPIC
that originated the loans, and on CAG, the affiliated
appraisal company that obtained contemporaneous appraisals
in many cases. The activities of those companies, however,
did not establish the prices of the properties. That was
done through negotiation between EPIC, the willing buyer,
and each of the five developers, the willing seller.
Generally, where there is evidence that parties having
adverse economic interests have dealt at arm's length and
have assigned a value to certain property, that evidence is
viewed as the most reliable basis for a determination of
fair market value of the property. See, e.g., Siegel v.
Commissioner, 78 T.C. at 687; Narver v. Commissioner, 75
T.C. at 97; McShain v. Commissioner, 71 T.C. at 1004;
Ambassador Apts., Inc. v. Commissioner, 50 T.C. 236, 243-
244 (1968), affd. 406 F.2d 288 (2d Cir. 1969). In the
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