Fair Market Value (FMV): Definition and How to Calculate It

Fair market value (FMV) is the price an asset would sell for on the open market, assuming certain conditions are met. These conditions include the buyer and seller being knowledgeable about the asset, acting in their own best interests, being free of undue pressure, and having ample time to make the transaction. Fair market value is commonly used in tax law, bankruptcy law, and the real estate market. It is also different from market value and appraised value. Taxation, insurance, and real estate are areas where fair market value is often utilized.
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