[simpleinterest]

Does this answer seem wrong to anyone:

Jeremiah Wilson died on January 11, Year One. The value of several large pieces of estate property fell sharply shortly after his death. Consequently, the executor of his estate chose the alternative valuation date for estate and other tax purposes. The property was all conveyed to the proper recipients on February 9, Year Two. On what date was the property valued?

A Six months after death (Correct Answer)

B December 31, Year One

C One year after death

D February 9, Year Two

I thought that if the alternative valuation date was chosen, but the goods were distributed prior to that date, you would use the value from the distribution date.

FAR 69, 85
AUD 84
BEC 85
REG 66, 87

[noodles]

January 11, Year One + 6 months = June 11, Year One = prior to February 9, Year Two (distribution date)

lol…

[Anonymous]

I've never heard of that rule. It should only be valued on the date of death or 6 months after if the alt valuation date is chosen. I dont believe theres a requirement to use one or the other depending on the dist date.

[simpleinterest]

Here is another question from the same test bank. Doesn't this seem to contradict the other answer? The explanations says that if the alt valuation date is used but they receive the property before the alt valuation date, you would use the FV of the property on the date of distribution :

Jan Livingston passed away on February 1, Year One. In her will, she left securities and her investments that had cost her $11,000 to her nephew Ron. The fair value of these securities at the date of death was $15,000. However, the securities were only worth $14,000 when conveyed to Ron on June 9, Year One. The executor to the estate chose the alternative valuation date. The value of the securities on August 1, Year One, was $13,000. Ron held the securities until March 3, Year Two, and sold them for $17,000. What gain should Ron report in Year Two as a result of this sale?

A $6,000

B $4,000

C $3,000 (Correct Answer)

D $2,000.

Explanation. The basis of inherited property is normally its fair value at the date of the previous owner’s death. However, the executor to the estate has the right to choose an alternative date for valuation purposes. That is the date of conveyance or six months after death, whichever comes first. Because Ron received these securities prior to the six-month date, the value of $14,000 when received is used. For income tax purposes, the gain is $3,000 ($17,000 sales price less $14,000 tax basis).

FAR 69, 85
AUD 84
BEC 85
REG 66, 87

[Anonymous]

I don't see how those answers contradict each other. The AVD is used in the first example because that date is prior to the date of distribution. The FMV at the date of distribution is used in the second example because the property was distributed prior to the AVD.

[NotAnother74]

Alternate Valuation Date it simply the election to defer FMV of the assets for 6 months.

If taxpayer dies on 1/1/2013 and the AVD is elected, then the very latest the value of the assets can be assessd is 7/1/2013, unless the assets are distributed prior to 7/1/2013.

Given the facts above, if the assets are distributed from the trust on 4/1/2013 and the AVD is elected, then you use the FMV of the assets as of 4/1/2013. If the assets are distributed on 8/1/2013, then you use the FMV of the assets on 7/1/2013 (6 months after the date of death). See timeline below.

Date of death (no AVD) If AVD (FMV Any Day Between) 6 Months

I

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I

F AR - 76
B EC - 82
A UD - 77 (lost credit)/Retake 2/25
R EG - 80

[wannabeCPA123]

this thread added clarity to my own studying thank you

FAR 78
REG 87
BEC 78
AUD 78
Passed all exams on first try! Good luck to everyone!

[Author]

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