What defines fair market value relating to personal property?

Fair market value for personal property is defined as the price that a knowledgeable buyer is willing to pay and a willing seller is willing to accept for that property in an open and competitive market. This definition emphasizes the voluntary nature of the transaction, indicating that both parties are acting in their own interests without undue pressure or coercion.

This approach recognizes the importance of both buyer and seller perspectives, where both parties have reasonable knowledge of the relevant facts and the context of the transaction. Additionally, it involves the assumption that the exchange occurs under typical market conditions, allowing for a true representation of the property's worth determined by market dynamics.

Other options, while related to price assessment, do not capture the essence of fair market value. For instance, price based on tax assessments may not reflect current market conditions or the actual value that could be achieved in a sale. Market trends alone provide insight into values but do not guarantee that a buyer and seller will agree on a specific price. Similarly, calculating the cost of production plus a margin might not accurately represent the market value, as it doesn't consider what buyers are actually willing to pay or the prices being accepted in the current market environment.