What is fair market value?
Fair market value is defined by Louisiana Revised Statute 47:2321 as follows: “Fair Market Value is the price for property which would be agreed upon between a willing and informed buyer and a willing and informed seller under the usual and ordinary circumstances; it shall be the highest price estimated in terms of money which property will bring if exposed for sale on the open market with reasonable time allowed to find a purchaser who is buying with knowledge of all the uses and purposes to which the property is best adapted and for which it can be legally used.” Finding the “fair market value” of your property involves discovering the price most people would pay for it in present condition. It is not quite that simple, however, because the assessor has to find what this value would be for every property every year. The assessor’s job doesn’t stop there. He must immediately begin gathering sales data for future years as the market is constantly changing.
First, it’s important to understand what total compensation comprises, because you need to be able to compare offers equally and have the tools necessary to speak to the hiring manager or human resources department in their own language. Organizations at different stages of development will have more or fewer components that are part of this total compensation package, and you need to be able to weigh each component’s value.
Canadian tax courts have accepted the following definition of fair market value: Fair market value of an asset for tax purposes has been defined as the highest price that it might reasonably be expected to bring if sold by the owner in the normal method applicable to the asset in question, in the ordinary course of business in a market not exposed to any undue stresses and composed of willing buyers and sellers dealing at arms length and under no compulsion to buy or sell.** ** Gifts and Income Tax, Canada Revenue Agency. Ref: P113(E) Rev. 05. Pg. 18 Note: Potential Program participants should consult with their own advisors in respect of the legal and tax consequences of participating, and should carefully review all documents associated with the COIP program. COIP recommends filing your tax return in hardcopy with all original receipts rather than e-filing.
Fair Market Value is defined as: “The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent’s gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.” Regulation § 20.2031-1.
Fair market value is a term that may be used in a variety of contexts. It might apply to the price of a home, car, or other property, and it can be used in legal ways, for taxation, or by insurance companies to determine the current worth of something. This worth does not take into account personal valuation of property. The fact that a person really likes a home has little to do with its fair market value. Instead it mainly refers to the monetary worth of the property if sold presently, when the sale is not rushed and prices of the property aren’t reduced for quick sale. Another way of defining this is to look at what price a home, car or other property would currently fetch on the open market. This is the value typically assigned to the property by other agencies. If a car crashes and is so damaged that repairing it would exceed its fair market value, an insurance company will typically offer that value instead of repairing the car. Note that this is not the same as price of replacin
