[Anonymous]

If the alternate valuation date is elected, I thought that if the land was distributed before the alternate valuation date (which is 6 months after the person dies), your basis is the value at the date it was distributed? Am I right here?

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Natalie inherited land from her Uncle Josh, who died January 3, 2014. The basis to Josh was $1,000,000 and the value on January 3, 2014, was $7,200,000. On July 3, 2014, the value was $7,600,000. When the land was distributed to Natalie on June 3, 2014, the value was $7,400,000. This land was Josh’s entire estate. Natalie’s basis for the estate is:

Incorrect

A. $1,000,000.

B. $7,200,000.

C. $7,400,000.

D. $7,600,000.

B. An estate tax return must be filed for the estate of Uncle Josh since its value is over $5,340,000 in 2014. In order to select the alternate valuation date of July 3, the valuation must be lower, resulting in reduced estate tax liability. Since the market value has risen, the value at time of death ($7,200,000) must be selected.

[JEjunkie]

This election can only be taken if it will lower the value of the estate. Because the value increased with the alternate valuation it will not be allowed. Think of it in terms of benefit to the government. If/when the land is sold the basis will be the lower amount, which will provide a bigger gain, in turn increasing the amount of tax due.

[Anonymous]

That helps a lot. Thanks.

[Author]

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