-56-
7.75-ct. diamond. We find that the decedent retained ownership
of these seven diamonds at his death.
We find the fair market value of these seven diamonds
through a three-step process. First, we look to the prices at
which Mamiye sold similarly weighted diamonds.37 We consider
those arm’s-length retail prices to be the best indicia of fair
market value on the basis of the record before us. If a diamond
sold by Mamiye was similar in weight to one of the seven diamonds
in question, we use that comparable diamond to measure the fair
market value of the diamond in question.
By its weight, the 5.01-ct. diamond that Mamiye was selling
for $75,000, if purchased separately, is comparable to the
five-ct. and 5.22-ct. diamonds in question. We decide that the
five-ct. diamond was for practical purposes the same weight as
the 5.01-ct. diamond sold by Mamiye and observe that the 5.22-ct.
diamond was 4.2 percent larger in weight than the 5.01-ct.
diamond ((5.22 - 5.01)/5.01 = .042). We find on the basis of the
$75,000 price that the fair market values of the five-ct. and
5.22-ct. diamonds were $75,000 and $78,150 ($75,000 + ($75,000 x
.042)), respectively, as of the applicable valuation date.
37 We understand that the value of gemstones depends not
just on weight but on color, cut, and clarity as well. The
record before us generally does not allow us to factor color,
cut, or clarity into our valuations as to gemstones which are
“comparable” to the gemstones in question.
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