Estate receives more time to elect alternate valuation

Plain-English summary

An estate filed its federal estate tax return after the regular due date but within one year after that date, including extensions. The executor then requested additional time to elect the alternate valuation method under IRC § 2032. The IRS found that the regulatory relief standards were satisfied. It granted 120 days from the ruling date to make the election.

Ruling snapshot

• Question: Could the estate receive additional time to elect alternate valuation under IRC § 2032?
• Outcome: Approved, with 120 days to make the election
• Key authorities: IRC §§ 2001 and 2032; Treas. Reg. §§ 20.2032-1(b)(3) and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201503003 Third Party Communication: None
Release Date: 1/16/2015 Date of Communication: Not Applicable
Index Number: 2032.00-00, 9100.00-00
Person To Contact:
----------------------------------------- ------------------------, ID No.
---------------------- Telephone Number:
---------------------------- ----------------------
Refer Reply To:
In Re: ---------------------------------------- CC:PSI:04
PLR-118480-14
Date: SEPTEMBER 30, 2014

LEGEND:

Decedent = ---------------------------
Estate = ----------------------------------------
Attorney = --------------------------------
Date 1 = ------------------
Date 2 = --------------------
Date 3 = -----------------

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

This responds to your authorized representative’s letter dated May 1, 2014, requesting
an extension of time under §§ 301.9100-1 and 301.9100-3 of the Procedure and
Administration Regulations to make an election under § 2032 of the Internal Revenue
Code.

The facts and representations submitted are summarized as follows. Decedent died on
Date 1. The due date (including extensions) for filing the Form 706, United States
Estate (and Generation-Skipping Transfer) Tax Return, for Decedent’s estate (the
Estate) was Date 2. After the due date passed, the Estate’s executor consulted with
Attorney, who advised him of the requirement for filing an estate tax return. The return
was filed on Date 3, which was within one year after the due date (including
extensions).

The executor now requests an extension of time to elect under § 2032 to use the
alternate valuation method in reporting the value of the gross estate on the return.
PLR-118480-14 2

Section 2302(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:

(1) 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.

(2) 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.

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. Such election, once made, shall be
irrevocable. Under § 2032(d)(2), no election may be made under § 2032 if such return
is filed more than 1 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 to make the election pursuant to §§ 301.9100-1 and 301.9100-3 will
not be granted unless the estate tax return is filed no later than 1 year after the due date
of the return, including extensions.

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).

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 Internal Revenue 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.

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.
PLR-118480-14 3

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. Consequently, the
executor is granted an extension of time of 120 days from the date of this letter to make
the alternate valuation election under § 2032. A copy of this letter should be forwarded
to the Cincinnati Service Center at the following address: Internal Revenue Service,
Cincinnati Service Center – Stop 82, Cincinnati, OH 45999.

The ruling contained in this letter is 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 ruling, it is subject to verification on examination.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.
PLR-118480-14 4

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

                                       Sincerely,

                                       Leslie H. Finlow
                                       Senior Technician Reviewer, Branch 4
                                       Office of Associate Chief Counsel
                                       (Passthroughs & Special Industries)

Enclosures
Copy for § 6110 purposes

: