A stepped-up basis appraisal in Palm Shores is designed to document historical fair market value, not determine the client's tax treatment. The value record should show how local characteristics such as a tiny municipality produces thin comparable sets and municipal identity and mailing geography should be verified affected the subject's competitive position on the applicable historical date.
The appraisal should document the real estate and competitive market as of the applicable historical date, leaving tax treatment to tax professionals. In Palm Shores, a tiny municipality produces thin comparable sets can materially affect which sales support that historical value.
The Palm Shores report should document how historical fair market value was developed and which evidence supports it. Whether that value becomes the taxpayer's basis, and how it is reported, remains a question for the taxpayer and tax professionals.
Limited local turnover can make nearby sales from other jurisdictions necessary, but those transactions should be selected for economic similarity rather than convenience. For historical fair market value documentation, the report should show whether buyers recognized this feature on the applicable date.
The appraisal should confirm where the property lies and which neighborhoods buyers actually viewed as substitutes. This characteristic belongs in the basis-supporting value only to the extent historical market evidence shows it affected the subject.
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