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reasonable knowledge of relevant facts.18 That standard assumes
a hypothetical buyer and seller so as to employ an objective
standard that would avoid “the uncertainties that would otherwise
be inherent if valuation methods attempted to account for the
[idiosyncracies of the particular seller or buyer]”. Propstra v.
United States, 680 F.2d 1248, 1252 (9th Cir. 1982).
Respondent contends that petitioner’s approach to value is
not objective and does not take into account the hypothetical
buyer and seller standard set forth in the regulations.
Continuing in that vein, respondent contends that petitioner’s
expert failed to take into account the intangibles, such as
goodwill, and merely focused on the potential for an income
stream from Rose’s customer accounts.
Respondent’s wooden reliance on the definition19 of fair
market value in section 1.170A-1(c)(2), Income Tax Regs., and
section 20.2031-1(b), Estate Tax Regs., misses the point.
Respondent ignores the fact that there was an actual purchase of
Rose by a willing buyer who was not under any compulsion to buy--
18 We note that respondent made the same argument with
respect to petitioner’s use of its own experience with respect to
the useful lives of the acquired Rose accounts. Our comment with
respect to the issue of value apply equally to both arguments.
19 Sec. 338 contains no reference to that definition and
provides no definition for purposes of the allocation of stock
purchase price to acquired assets. In addition, sec. 338 permits
taxpayers to allocate a portion of the acquisition cost to each
asset in an amount that does not exceed the fair market value of
the asset.
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