Estate received late alternate valuation election relief

Plain-English summary

An estate’s personal representative timely filed Form 706 after relying on a law firm, but the firm did not advise making the section 2032 alternate valuation election. During preparation of the estate accounting, the firm determined that the election should have been made. The personal representative filed a supplemental Form 706 electing alternate valuation within one year after the original return’s due date. The IRS found the late-election standards satisfied and extended the election deadline to the date the supplemental return was filed.

Ruling snapshot

• Question: May the estate make a late election to value estate property under section 2032’s alternate valuation rules?
• Outcome: approved, effective on the date the supplemental Form 706 was filed
• Key authorities: IRC § 2032; Treas. Reg. § 20.2032-1(b)(3); Treas. Reg. §§ 301.9100-1 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201938002                                              Third Party Communication: None
Release Date: 9/20/2019                                        Date of Communication: Not Applicable
Index Number: 9100.00-00, 2032.00-00
                                                               Person To Contact:
------------------------------------------------------------   ---------------, ID No. ----------------
--------------------                                           Telephone Number:
-------------------------                                      --------------------
-----------------------------------------                      Refer Reply To:
                                                               CC:PSI:04
                                                               PLR-103723-19
         Re: -----------------------------------               Date:
                                                               June 05, 2019




LEGEND

Decedent          =        ------------------------------- ----------------
Date 1            =        --------------------------
Child             =        ----------------------------
Law Firm          =        ---------------------------
Date 2            =        ---------------------------
Date 3            =        --------------------



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

This letter responds to your authorized representative’s letter dated January 11, 2019,
requesting an extension of time under §§ 301.9100-1 and 301.9100-3 of the Procedure
and Administration Regulations to make an alternate valuation election under § 2032 of
the Internal Revenue Code (Code).

The facts and representations submitted are summarized as follows. Decedent died on
Date 1. Child is the personal representative of Decedent’s estate. The personal
representative retained Law Firm to prepare Form 706, United States Estate (and
Generation-Skipping Transfer) Tax Return. The personal representative timely filed
Form 706 on or about Date 2. Law Firm did not advise the personal representative to
elect alternate valuation under § 2032 on the Form 706. Accordingly, the personal
representative did not elect alternate valuation under § 2032 on the Form 706. In

PLR-103723-19                                2

preparation of the accounting for the Decedent’s estate, Law Firm determined that the
election for alternate valuation under § 2032 should have been made.

On or about Date 3, which was within one year after the due date of the Form 706, the
personal representative filed a supplemental Form 706 making the alternate valuation
election under § 2032. Subsequently, the personal representative submitted this
request for an extension of time under § 301.9100-3 to make the 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:

       (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 (estate tax) and the tax imposed
by chapter 13 (generation-skipping transfer tax) 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 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 Internal Revenue Code
except Subtitles E, G, H, and I, if the taxpayer demonstrates to the satisfaction of the

PLR-103723-19                                  3

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 301.9100-2 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. Consequently, the
personal representative is granted an extension of time to Date 3, the date the
supplemental Form 706 was filed, 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.

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.

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. This ruling is directed only to the
taxpayer requesting it.

PLR-103723-19                                 4

Section 6110(k)(3) of 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,


                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)



                                    By: Karlene M. Lesho
                                       Karlene M. Lesho
                                       Senior Technician Reviewer, Branch 4
                                       Office of Associate Chief Counsel
                                       (Passthroughs & Special Industries)




Enclosures (2)
      Copy for § 6110 purposes
      Copy of this letter