Alternate Valuation - Now, Perhaps, More Important than Ever

Journal of Taxation, Vol. 111, p. 90, 2009

43 Pages Posted: 25 Aug 2009

Date Written: August 1, 2009

Abstract

The alternate valuation rules in Section 2032 can alleviate the hardship that a decedent's estate may experience as a result of a decrease in the value of the gross estate from the date of the decedent's death to the date on which estate tax has to be paid. These rules permit an executor to elect to value the gross estate, as a general matter, six months after the decedent's death provided that both the value of the gross estate and the federal estate tax (and certain generation-skipping transfer (GST) tax) would decline as a result of the election. Perhaps at no other time since the Great Depression, when alternate valuation was originally enacted, has the election been as useful for estates as it is in today's current economic downturn. This article discusses the impact of the Proposed Regulations under 2032 and the Kohler case, among other things. Many considerations must be kept in mind, including the income tax impact of a lower step-up in basis. Other complications that may arise involve the type of assets in the gross estate (such as retirement plan benefits that will be IRD) and the relationship between the marital deduction and a bypass trust.

Suggested Citation

Blattmachr, Jonathan G. and Lo, Alvina H., Alternate Valuation - Now, Perhaps, More Important than Ever (August 1, 2009). Journal of Taxation, Vol. 111, p. 90, 2009, Available at SSRN: https://ssrn.com/abstract=1460276

Jonathan G. Blattmachr (Contact Author)

Milbank LLP ( email )

55 Hudson Yards
New York, NY 10001-2163
United States
212-530-5000 (Phone)

Alvina H. Lo

Credit Suisse Private Banking ( email )

Eleven Madison Avenue
New York, NY 10010
United States

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