-203-
938, 956 (1982) (hypothetical sale should not be constructed in a
vacuum isolated from the actual facts that affect value). The
Board stated that the fair market value of an item is determined
from a hypothetical transaction between a “hypothetical willing
seller and buyer, who are by judicial decree always dickering for
price in the light of all the facts, [and] can not be credited
with knowing what the future will yield.” Natl. Water Main
Cleaning Co. v. Commissioner, supra at 239; accord Estate of
Watts v. Commissioner, 823 F.2d 483, 486 (11th Cir. 1987) (the
hypothetical buyer and the hypothetical seller each seek to
maximize his or her profit from any transaction involving the
property), affg. T.C. Memo. 1985-595; Estate of Curry v. United
States, 706 F.2d 1424, 1428 (7th Cir. 1983) (hypothetical willing
buyer and the hypothetical willing seller are presumed to be
dedicated to achieving the maximum economic advantage).
In 1936, the U.S. Supreme Court clarified as to the
definition of fair market value that fair market value is
determined by viewing the item under consideration on the basis
of its best use.65 St. Joseph Stock Yards Co. v. United States,
298 U.S. 38, 60 (1936). There, the Court held that two adjacent
pieces of land should be valued the same per square foot
65 The notion of “highest and best use” was later recognized
by Congress as a requirement of fair market value. H. Conf.
Rept. 94-1380, at 5 (1976), 1976-3 C.B. (Vol. 3) 735, 741.
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