Fair market value has its origin in law and is defined as that price that a willing buyer will pay and a willing seller will sell at some point in time, with neither the buyer nor the seller under any compulsion to buy or sell, and both having equal and reasonable bwwledge of the facts. In reality, a perfect sale probably never occurs in which a willing buyer and a willing seller are under no compulsion to buy or sell and both are equally familiar with all the facts. Nonetheless, it is necessary to prepare fair market value estimates for oil and gas properties for the purpose of gift taxes, estate taxes, condemnation cases, mergers and divorce settlements.

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