Document Type


Publication Date

Spring 2008


Fair market value is defined in the section 2031 Regulations. For its validity, that definition of fair market value relies on the normal definitions of its significant terms: a seller is someone who is seeking the highest price for her product and a buyer is someone who wants to obtain the lowest price for his purchase. It is only that tension that creates the realistic, and fair, market value of that asset. Indeed, without that conflict, the definition is comprised of hollow words.

In the context of family limited partnerships, terms have been misused. By utilizing the limited partnership shell, liquid assets become illiquid in order to discount those assets and to pay less transfer tax. There are already regulations in the income tax loss context that deny losses for the intentional destruction of property values. They can serve as models for Treasury to refine the fair market value definition to conform to a more realistic and public policy supported meaning of value when terms in the general definition of fair market value have gone awry.