[Code of Federal Regulations]
[Title 26, Volume 14]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR25.2512-1]

[Page 540]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 25_GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954--Table of Contents
 
Sec.  25.2512-1  Valuation of property; in general.

    Section 2512 provides that if a gift is made in property, its value 
at the date of the gift shall be considered the amount of the gift. The 
value of the property is the price at which such 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 value of a particular item of property is not the 
price that a forced sale of the property would produce. Nor is the fair 
market value of an item of property the sale price 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. Thus, in the 
case of an item of property made the subject of a gift, which is 
generally obtained by the public in the retail market, the fair market 
value of such an item of property is the price at which the item or a 
comparable item would be sold at retail. For example, the value of an 
automobile (an article generally obtained by the public in the retail 
market) which is the subject of a gift, is the price for which an 
automobile of the same or approximately the same description, make, 
model, age, condition, etc., could be purchased by a member of the 
general public and not the price for which the particular automobile of 
the donor would be purchased by a dealer in used automobiles. Examples 
of items of property which are generally sold to the public at retail 
may be found in Sec.  25.2512-6. The value is generally to be determined 
by ascertaining as a basis the fair market value at the time of the gift 
of each unit of the property. For example, in the case of shares of 
stocks or bonds, such unit of property is generally a share or a bond. 
Property shall not be returned at the value at which it is assessed for 
local tax purposes unless that value represents the fair market value 
thereof on the date of the gift. All relevant facts and elements of 
value as of the time of the gift shall be considered. Where the subject 
of a gift is an interest in a business, the value of items of property 
in the inventory of the business generally should be reflected in the 
value of the business. For valuation of interests in businesses, see 
Sec.  25.2512-3. See Sec.  25.2512-2 and Sec. Sec.  25.2512-4 through 
25.2512-6 for further information concerning the valuation of other 
particular kinds of property. See Sec.  25.2702-6 for an adjustment to 
the total amount of an individual's taxable gifts where the individual's 
current taxable gifts include the transfer of certain interests in trust 
that were previously valued under the provisions of section 2702.

[T.D. 6826, 30 FR 7709, June 15, 1965; as amended by T.D. 8395, 57 FR 
4254, Feb. 4, 1992]