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determined using a “hypothetical” buyer. We conclude that it is.
A hypothetical buyer may be one of a class of buyers who is
positioned to use the purchased assets more profitably than other
entities. Accordingly, we have held that fair market value takes
into account special uses that are realistically available
because of a property’s adaptability to a particular business.
Stanley Works v. Commissioner, supra at 400. Acknowledging the
existence of such businesses in the universe of hypothetical
buyers also is consistent with the standard that assets are not
valued in a vacuum but, instead, are valued at their highest and
best use.
The cases petitioners cite do not require a different
conclusion. The cases of Morrissey v. Commissioner, 243 F.3d
1145 (9th Cir. 2001), revg. and remanding Estate of Kaufman v.
Commissioner, T.C. Memo. 1999-119, Estate of Andrews v.
Commissioner, supra, and Estate of Magnin v. Commissioner, T.C.
Memo. 2001-31, stand for the proposition, which we accept, that
the attributes of a hypothetical willing buyer cannot be limited
to those of a particular buyer. That proposition is inapplicable
where, as here, we do not confine the hypothetical buyer to a
specific and identifiable buyer but include the entire class of
buyers for whom the Sta-Home tax-exempt entities’ cost-shifting
attributes could be especially adaptable. Stanley Works v.
Commissioner, supra.
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