PLR 201144011: IRS grants more time for an estate's alternate valuation election

Plain-English summary

An estate asked for more time to make the alternate valuation election under § 2032 after its attorney failed to advise the executrix about the election. The IRS found that the estate met the standards for relief because it reasonably relied on a qualified tax professional and granting relief would not prejudice the government. It granted 120 days from the letter date to make the election on a supplemental Form 706. The ruling did not address other federal tax consequences.

Ruling snapshot

• Question: May the estate make a late § 2032 alternate valuation election?
• Outcome: approved
• Key authorities: IRC § 2032; Treas. Reg. §§ 20.2032-1(b)(3), 301.9100-1, and 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201144011
Third Party Communication: None
Release Date: 11/4/2011
Date of Communication: Not Applicable
Index Number: 2032.00-00, 9100.00-00
Person To Contact:
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------------------------------, ID No. ------------
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Telephone Number:
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In Re: ---------------------------------------- Refer Reply To:
CC:PSI:B04
PLR-115700-11
Date:
July 25, 2011

Legend:

Decedent = ---------------------------
Date = --------------------------

Dear -------------:

This letter responds to your authorized representative's letter of April 7, 2011, requesting an extension of time under §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to make the alternate valuation election under § 2032 of the Internal Revenue Code (Code).

The facts and representations submitted are summarized as follows. Decedent died on Date. The executrix of Decedent’s estate retained an attorney to prepare the estate’s Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. The Form 706 was timely filed. The attorney, however, failed to advise the executrix that the estate could make the alternate valuation election under § 2032 on the Form 706. The executrix is requesting an extension of time to make the alternate valuation election.

Law and Analysis:

Section 2032(a) provides, in part, that the value of the gross estate may be determined, if the executor so elects, by valuing all the property included in the gross estate as follows. In the case of property distributed, sold, exchanged, or otherwise disposed of, within 6 months after the decedent's death such property shall be valued as of the date of distribution, sale, exchange, or other disposition. In the case of property not distributed, sold, exchanged, or otherwise disposed of, within 6 months after the decedent's death such property shall be valued as of the date 6 months after the decedent's death.
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Section 2032(c) provides that no election may be made under § 2032 with respect to an estate unless such election will decrease: (1) the value of the gross estate; and (2) the sum of the tax imposed under chapter 11 of the Code and the tax imposed by chapter 13 with respect to property includible in the decedent's gross estate (reduced by credits allowable against such taxes).

Section 2032(d)(1) provides that an election under § 2032 shall be made by the executor on the return of tax imposed by § 2001. Under § 2032(c)(2), no election may be made under § 2032 if such return is filed more than one year after the time prescribed by law (including extensions) for filing such return.

Section 20.2032-1(b)(3) of the Estate Tax Regulations provides that a request for an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 will not be granted unless the estate tax return is filed no later than one year after the due date of the return, including extensions.

Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of time to make a regulatory election, or statutory election (but no more than 6 months except in the case of a taxpayer who is abroad), under all subtitles of the Code except subtitles E, G, H, and I, if the taxpayer demonstrates to the satisfaction of the Commissioner that the taxpayer has acted reasonably and in good faith, and granting relief will not prejudice the interests of the government.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make an election. Section 301.9100-1(a).

Section 301.9100-2 provides an automatic extension of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of § 301.9100-2.

Requests for relief under § 301.9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government.

Section 301.9100-3(b)(1)(v) provides that a taxpayer is deemed to have acted reasonably and in good faith if the taxpayer reasonably relied on a qualified tax professional, including a tax professional employed by the taxpayer, and the tax professional failed to make, or advise the taxpayer to make, the election.

Based on the facts submitted and the representations made, we conclude that the standards of §§ 301.9100-1 and 301.9100-3 have been satisfied. The executrix of Decedent’s estate is granted an extension of time to the date which is 120 days from
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the date of this letter to make the alternate valuation election under § 2032. A copy of this letter should be attached to the supplemental Form 706 on which the § 2032 election is made and sent to the Cincinnati Service Center at the following address: Internal Revenue Service, Cincinnati Service Center — Stop 82, Cincinnati, OH 45999.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to your authorized representatives.

The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.

Sincerely,

James F. Hogan

James F. Hogan
Chief, Branch 4
(Passthroughs & Special Industries)

Enclosures
Copy for § 6110 purposes
Copy of this letter

cc: