The price an item would sell for on the open market between a willing buyer and a willing seller, both having reasonable knowledge of relevant facts. Used for estate tax valuations, insurance appraisals, and charitable donation deductions.
How It Works in Practice
Fair market value is a legal and tax concept, not necessarily what an item sells for at auction. Auction prices can be above or below FMV depending on the audience, competition, and timing. For estate tax purposes, the IRS uses FMV as of the date of death. Professional appraisers determine FMV using comparable sales data, while auctioneers often provide FMV estimates based on their market experience. AI cataloging tools can generate value tier estimates that approximate FMV ranges.
Frequently Asked Questions
Is fair market value the same as auction price?
How is fair market value determined for estate items?
Related Terms
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