Grants estate 120 days to elect alternate valuation

Plain-English summary

An estate timely filed Form 706 within one year after its due date, but the CPA preparing the return failed to check the box electing alternate valuation under section 2032. The CPA stated that the omission was accidental and that the election had been intended. The IRS found that the executor reasonably relied on a qualified tax professional and satisfied the standards for discretionary filing relief. It gave the estate 120 days to file Form 706 with the alternate valuation election and a copy of the ruling.

Ruling snapshot

• Question: Could the estate make a late section 2032 alternate valuation election after its CPA failed to check the election box?
• Outcome: Approved; a 120-day extension was granted.
• 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: 201815001 Third Party Communication: None
Release Date: 4/13/2018 Date of Communication: Not Applicable
Index Number: 2032.00-00, 9100.00-00
Person To Contact:
-------------------------------- --------------------------, ID No. --------------
----------------------------- Telephone Number:
------------------------------------ ----------------------
Refer Reply To:
CC:PSI:04
PLR-120346-17
Date:
Re: ----------------------------------- December 11, 2017

Legend

Decedent = -------------------------------------------------
Executor = -------------------
CPA = ------------------------
Date 1 = --------------------
Date 2 = ----------------------------

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

   This letter responds to your authorized representative’s letter dated

June 15, 2017, requesting an extension of time under § 301.9100 of the Procedure and
Administration Regulations to make an alternate valuation election under § 2032 of the
Internal Revenue Code.

   The facts and representations submitted are summarized as follows: Decedent

died on Date 1. Executor of Decedent’s estate consulted CPA to prepare the Form 706,
United States Estate (and Generation-Skipping Transfer) Tax Return. A Form 706 was
timely filed on Date 2, a date within one year after the due date, CPA failed to make the
alternate valuation election under § 2032 on the Form 706. CPA stated in an affidavit
that he intended to make the alternate valuation election, but failed to check the box.
Executor now requests an extension of time to make the election under § 2032 to use
the alternate valuation method in reporting the value of the gross estate on the return

   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:

     (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 under the rules set forth in §§ 301.9100-2 and 301.9100-3 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 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. Accordingly, we grant
an extension of time of 120 days from the date of this letter in which to make the
alternate valuation election under § 2032. The election should be made by filing a
Form 706 and a copy of this letter within 120 days from the date of this letter, to the
Cincinnati Service Center, at the following address: Internal Revenue Service,
Cincinnati Service Center, Stop 82, and 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.

     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,

                                       Lorraine E. Gardner
                                   By: ______________________________
                                       Lorraine E. Gardner
                                       Senior Counsel, Branch 4
                                       Office of Associate Chief Counsel
                                       (Passthroughs & Special Industries)

Enclosures
Copy for section 6110 purposes
Copy of this letter

cc: