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You bought a six-pack. Do you value
your acquisition at $2 or $3?
A. Of course not. You would value it
based on what you paid for it, because it
takes into account the discount. The only
way you could achieve the higher number
would be to go into the soda-dispensing
business and sell out individual Cokes to
individual users of one Coke after another.
Dr. Hewitt's response suggests that the purchaser must
value the property on the basis of the amount paid,
unless the purchaser is a person who is in the business
of reselling the property, like each of the subject
partnerships, and receives a discount from the seller.
In such a case, the purchaser is entitled to value the
property at the resale value; i.e., $3 in the hypothetical
example posited by respondent's counsel, or $1 more than
the buyer paid for the property.
Dr. Hewitt's testimony on this point is consistent
with the cases, discussed above, involving the
determination of the appropriate market to use in
estimating the value of an item of property. See, e.g.,
Goldstein v. Commissioner, 89 T.C. at 544-546; Lio v.
Commissioner, 85 T.C. at 66; Anselmo v. Commissioner, 80
T.C. at 882-883. Under those cases, the fair market value
of an item of property is its sale price in the market in
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