Fair Market Value (FMV) refers to the estimated price at which an asset would sell in a competitive and open market. This value is determined by the conditions that both the seller and buyer are willing to accept, without any pressure or constraints to complete the sale.
FMV is often used in accounting and taxation contexts to assess the value of assets for purposes such as property transfers, taxation, and financial reporting. It reflects the price that a knowledgeable, willing buyer would pay to a knowledgeable, willing seller, both acting in their own best interests.
For example, if a piece of real estate is appraised at $300,000, and there are comparable sales in the area indicating that similar properties sold for around that amount, then $300,000 could be considered the Fair Market Value of the property.
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