Estate received relief for a late alternate-valuation election after appraisals arrived

Plain-English summary

An estate timely filed Form 706 before third-party appraisers had completed valuations for estate assets. The personal representatives did not know about the IRC § 2032 alternate-valuation election, and their return preparer had not advised them to make either the election or a protective election. After the appraisals arrived, the preparer explained the option and the estate filed a supplemental Form 706 electing alternate valuation. The supplemental return was filed within one year after the return deadline and showed lower gross-estate value and lower federal estate tax. The IRS concluded that the estate satisfied the late-election relief standards and extended the election deadline to the date the supplemental return was filed. The ruling does not determine whether the estate ultimately meets the statutory requirements for alternate valuation or establish the assets’ alternate-date values.

Ruling snapshot

• Question: Should the estate receive an extension to make the IRC § 2032 alternate-valuation election on its supplemental Form 706?
• Outcome: Approved
• Key authorities: IRC §§ 2001, 2032(a), 2032(c), 2032(d); Treas. Reg. §§ 20.2032-1(b), 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202513003 Third Party Communication: None
Release Date: 3/28/2025 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:B04
---------------------------- PLR-114438-24
--------------------------- Date:
December 23, 2024

In Re: --------------------------------

LEGEND

Decedent = ----------------------------------------------
Date 1 = ------------------
Niece 1 = ---------------------------------------------
Niece 2 = --------------------------------------------
Firm = -----------------------
Date 2 = ----------------------
Date 3 = ------------------
Date 4 = --------------------

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

  This letter responds to your authorized representative’s letter dated August 9,

2024, and subsequent correspondence, 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. Niece 1 and Niece 2 are the personal representatives of the
Decedent’s estate. The personal representatives retained Firm to prepare Form 706,
United States Estate (and Generation-Skipping Transfer) Tax Return, and to assist in
retaining third-party appraisers for certain estate assets. At the time of filing the
Form 706, Firm had not received appraisals for Decedent’s estate’s assets because the
appraisers had not yet completed the appraisals.
PLR-114438-24 2

    On Date 2, Decedent’s estate timely filed Form 706 without making the election

for alternate valuation under § 2032 or the protective alternate valuation election under
§ 20.2032-1(b)(2) of the Estate Tax Regulations. As of Date 2, the personal
representatives were not aware of the need to make, and Firm had not advised the
personal representatives of the ability to make, the election for alternate valuation under
§ 2032 or the protective alternate valuation election under § 20.2032-1(b)(2). On or
about Date 3, Firm received appraisals for the estate’s assets and advised the personal
representatives of the ability to make the alternate valuation election under § 2032.

   On Date 4, Decedent’s estate filed a supplemental Form 706, attaching the

required appraisals and electing alternate valuation under § 2032. As reflected on the
supplemental Form 706, the alternate valuation election results in a decrease in the
value of the gross estate and the amount of federal estate tax due.

     Decedent’s estate requests an extension of time to Date 4, the date the

supplemental Form 706 was filed, to make an alternate valuation election under § 2032.
Date 4 is less than one year after the time prescribed by law (including extensions) for
filing the estate tax return.

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 the election will decrease: (1) the value of the gross estate;
and (2) the sum of the federal estate tax and the generation-skipping transfer tax
imposed on the estate 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(d)(2), no election may
be made under § 2032 if the return is filed more than 1 year after the time prescribed by
law (including extensions) for filing the return.
PLR-114438-24 3

    Section 20.2032-1(b)(2) provides that if, based on the return of tax as filed, use

of the alternate valuation method would not result in a decrease in both the value of the
gross estate and the sum (reduced by allowable credits) of the estate tax and the
generation-skipping transfer tax liability payable by reason of the decedent’s death with
respect to the property includible in the decedent’s gross estate, a protective election
may be made to use the alternate valuation method if it is subsequently determined that
such a decrease would occur. A protective election is made on the return of tax
imposed by § 2001. The protective election is irrevocable as of the due date of the
return (including extensions of time actually granted). The protective election becomes
effective on the date on which it is determined that use of the alternate valuation method
would result in a decrease in both the value of the gross estate and in the sum (reduced
by allowable credits) of the estate tax and generation-skipping transfer tax liability
payable by reason of the decedent’s death with respect to the property includible in the
decedent’s gross estate.

    Section 20.2032-1(b)(3) of the Estate Tax Regulations provides that a request for

an extension of time to make the election or protective 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 actually granted).

    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.

   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.

   Section 301.9100-3(b)(1)(ii) provides that a taxpayer is deemed to have acted

reasonably and in good faith if the taxpayer failed to make the election because of
intervening events beyond the taxpayer's control.

  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.
PLR-114438-24 4

   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. Therefore, the
personal representatives are granted an extension of time to Date 4, the date the
supplemental Form 706 was filed, to make the alternate valuation election under
§ 2032. A copy of this letter along with a copy of the filed supplemental Form 706
should be forwarded to the Internal Revenue Service Center, at the following address:
Department of the Treasury, Internal Revenue Service Center, ATTN: E&G, Stop 824G,
7940 Kentucky Drive, Florence, KY 41042-2915.

   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. Specifically, we express no opinion concerning whether
Decedent’s estate is entitled to value Decedent’s assets on the alternate valuation date
(such conclusion depending, in part, on those factors listed in § 2032(c)). Similarly, we
express no opinion concerning the value of Decedent’s assets on the alternate valuation
date (such conclusion depending upon those factors listed in § 2032(a)).

   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 rulings, it is subject to verification on examination.

   This ruling is directed only to the taxpayer requesting it. Section 6100(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
representative.

                                     Sincerely,

                                     Associate Chief Counsel
                                     Passthroughs and Special Industries

                                     Melissa C. Liquerman
                                     ______________________________
                              By:    Melissa C. Liquerman
                                     Senior Counsel, Branch 4
                                     Office of the Associate Chief Counsel
                                     (Passthroughs and Special Industries)

Enclosure:
Copy for § 6110 purposes
PLR-114438-24 5

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