-209-
We find neither of these requirements in the definition of “fair
value” as set forth in SFAS No. 107. Nor are we able to conclude
on the basis of the record that either of these requirements has
been imputed into that definition under SFAS No. 107, or, in
fact, into the accountant’s definition of that term in general.66
Our understanding of the difference between these two terms
is further reinforced by additional testimony from Sziklay. He
concluded that
Fair market value for income tax reporting purposes is
related to, but not the same as, fair value for
financial reporting purposes which is directed to the
needs of financial statement users. The former is
encompassed in the latter. I have not read anything in
the trial record, expert reports, the Internal Revenue
Code, Treasury regulations, Revenue Rulings, Revenue
Procedures, federal tax cases, etc. to suggest that
fair market value for income tax purposes must conform
to fair value for financial reporting purposes for the
purpose of marking-to-market * * * [FNBC’s] portfolios
of derivative securities.
He testified further that “the term, fair value, for accounting
purposes is a broader term than fair market value for tax
66 For purposes of financial accounting, the term “fair
value” denotes primarily:
1. Value determined by bona fide bargain between
well-informed buyers and sellers; the price for which
an asset could be bought or sold in an arm’s-length
transaction between unrelated parties; value in a sale
between a willing buyer and a willing seller, other
than in a forced or liquidation sale.
2. An estimate of such value, in the absence of sales
or quotations (e.g., the approximation of exchange
price in nonmonetary transactions). [Kohler’s
Dictionary for Accountants 211 (6th ed. 1983).]
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