-201-
no further explanation of the meaning of the term “fair market
value”, and the committee reports underlying the act were equally
silent, using the term without explaining it. H. Rept. 767, 65th
Cong., 2d Sess. (1918), 1939-1 C.B. (Part 2) 86, 88.
Over the years, judicial tribunals have defined the term by
enunciating certain standards which must be considered in passing
on a determination of fair market value. First, in 1919, the
Advisory Tax Board (ATB) recommended an interpretation of the
term “fair market value”. T.B.R. 57, 1 C.B. 40 (1919). There,
the ATB stated that the term refers to a fair value that both a
buyer and a seller, who are acting freely and not under
compulsion and who are reasonably knowledgeable about all
material facts, would agree to in a market of potential buyers at
a fair and reasonable price. Id. Six years later, in 1925, the
Board of Tax Appeals (Board) stated that the buyer is considered
to be a willing buyer and that the seller is considered to be a
willing seller. Hewes v. Commissioner, 2 B.T.A. 1279, 1282
(1925); accord United States v. Cartwright, 411 U.S. 546, 550-551
(1973) (“The willing buyer-willing seller test of fair market
value is nearly as old as the federal income, estate, and gifts
taxes themselves”). The Board also stated in that case that fair
market value must be determined without regard to any event that
occurs after the date of valuation. Hewes v. Commissioner, supra
at 1282; accord First Natl. Bank v. United States, 763 F.2d 891,
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