Appraisers are aware of the
contractual terms that reflect the type of value that may be
required in preparation of an appraisal. The insurance industry
uses Replacement Value and Actual Cash Value. The Internal Revenue
Service requires that Fair Market Value be used for all donation and
estate tax purposes, references follow:
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Sec. 1.170.1-1(c)
Income Tax Regulations, Rev. Proc. 66-49: Donations
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Sec. 20.2031-1 (b)
Income Tax Regulations, Rev. Proc. 66-49: Estate Tax
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IRS Publication
561 Determining the Value of Donated Property
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IRS Publication
448 Federal Estate and Gift Taxes
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Fair Market Value:
Is the price at which the property would
change hands between a willing buyer and a willing seller, neither
being under and compulsion to buy or sell and both having reasonable
knowledge of relevant facts. (Treasury Regulation Sec.
20.2031-1[b])
Market
Value:
The most probable price which a property
should bring in a competitive and open market under all conditions
requisite to a fair sale, the buyer and seller, each acting
prudently, knowledgeably and assuming the price is not affected by
undue stimulus.
Actual Cash Value:
The price in terms of cash or other
precisely revealed terms that would be necessary to replace a
property with another of similar age, quality, origin, appearance,
size and condition within a reasonable length of time in an
appropriate and relevant market. This definition encompasses the
concept of “as is” or “with or without restoration.” It is the
market value of a property, plus appreciation or less all forms of
depreciation.
Replacement
Value:
The price in
terms of cash or other precisely revealed terms that would be
required to replace a property with another of similar age,
quality, origin, appearance and condition within a reasonable
length of time in an appropriate and relevant market. Intangible
provenance value is additive as appropriate.
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