What is a propertys fair market value according to the IRS?
The IRS defines fair market value of property for the purposes of taxation. Most often this is determined for charitable contributions, as taxpayers can deduct the fair market value of property donated to charity if they itemize their deductions. Fair market value also is used to determine the taxes due on gifts.Cost of ItemIf the property was purchased close to the time of donation, then the cost of the item may be used in determining fair market value. It must be considered, however, whether there was an increase or decrease in value since purchase.Comps (Comparables)Sales of comparable properties (called “comps” for short) are sometimes used to determine fair market value, particularly for real estate. The comparable properties must be similar to the property donated, and the sale must be as recent as possible for an accurate use.Replacement CostSometimes replacement cost is used to determine the fair market value of property. In this case, one must consider whether there is a reaso
