Vice-Mayor Joy Belmonte who heads the city council on Thursday cleared the controversy amid letters circulating that the city's fair market values would be raised this year.
A cool and composed Belmonte advised the public to simply disregard the erroneous announcement as "the adjustment of fair market values had already been suspended''.
This "disallowance" does not apply, however, with respect to (1) any replacement property received by the taxpayer before the end of the identification period and (2) with respect to any property received before the end of the 180-day replacement period as long as the taxpayer received before the end of the replacement period at least 95 percent of the aggregate fair market value
of all identified replacement properties (the "95-percent rule").
2003-51 sets forth guidelines that taxpayers and the IRS can use in making fair market value
(FMV) determinations for inventory items acquired when a taxpayer purchases the assets of a business for a lump sum, or a corporation acquires the stock of another and makes a Sec.
When the mortgagor is solvent and personally liable, the outstanding debt is considered realized to the extent of the property's fair market value at the reconveyance, foreclosure or abandonment date.
When the mortgagor is insolvent and personally liable, the outstanding debt is treated as an amount realized to the same extent it is when the mortgagor is solvent--that is, to the extent of the property's fair market value. Accordingly, the mortgagor recognizes gain equal to the excess of the amount realized over the property's adjusted basis.
Generally, a fair market value should be based on a thorough investigation of the business and the proper application of current valuation methodology.
The internal Revenue Service defines fair market value as "the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of relative facts."
A new holding period begins as of the election date, and a new basis, equal to the asset's fair market value
77-12 also states that these valuation methods "can only serve as guidelines for determining the fair market value
of inventories," because "valuing inventory is an inherently factual determination"
The court noted that a shareholder's basis in property may differ from its fair market value
. Although section 1012 generally provides that an asset's basis is its cost, in the case of a transfer that qualifies for nonrecognition under section 351, the shareholder must substitute the basis of that property for what would otherwise be the cost basis of the stock.
The taxpayer may rebut the presumption by showing by a preponderance of the evidence: (1) that the property in question was valued at more than its fair market value
, and (2) that its fair market value
was not arrived in accordance with generally accepted appraisal practices, procedures, rules and standards as prescribed by nationally recognized professional appraisal organizations such as the IAAO and applicable Virginia law relating to valuation of property.