Q:

How do you calculate fair market value?

A:

According to the Internal Revenue Service, fair market value can be calculated based on the current selling price of the property, the price of comparable goods, the cost to replace the item or the opinion of experts on an items value. No specific formula can universally calculate FMV.

Some common errors in calculating FMV, as listed by the IRS, include failing to account for unusual market conditions, poorly selecting comparable goods, and the inability to account for future events relating to the price of the good or incorrectly using the past to predict the future. According to BusinessDictionary and the IRS, fair market value is often used in determining tax information for inheritance and donations.


Is this answer helpful?

Similar Questions

  • Q:

    How do I calculate VAT backwards?

    A:

    The Value Added Tax can be calculated from the total cost of an item by multiplying the total cost by the VAT fraction, according to HM Revenue & Customs. In the reverse, the formula to calculate the VAT of an item when only given the base price and the VAT rate is the base price times the percentage rate of the VAT.

    Full Answer >
    Filed Under:
  • Q:

    How do you calculate prorated amounts?

    A:

    Prorated amounts are calculated by dividing the cost of a service by the number of days in the service period, according to Lucas Hall from Landlordology. The resulting number is then multiplied by the number of days the service is used to find the prorated amount.

    Full Answer >
    Filed Under:
  • Q:

    How do you calculate theoretical yield?

    A:

    Theoretical yield is calculated by balancing the reaction and determining the ratio of reactant to the product. Find the starting number of each material used, determine the reagent, and calculate the number of moles and grams of the product. Then isolate and measure the amount of product to compare the actual yield to the theoretical yield.

    Full Answer >
    Filed Under:
  • Q:

    How do you calculate gross sales?

    A:

    According to AccountingTools, gross sales are calculated by adding up the revenue from all sales transactions without taking into account any costs. This is in contrast to net sales, which subtract costs like operating expenses or taxes.

    Full Answer >
    Filed Under:

Explore