Iowa Administrative Code › Agency 701 - Revenue Department › Title X - Inheritance Tax › Chapter 900 - Inheritance Tax › Rule 701-900.10 - Alternate Valuation Date

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
When available.
The alternate valuation date allowed by
				26 U.S.C. Section
				2032 is available for estates of decedents
				dying on or after July 1, 1983, on the same terms and conditions which govern
				the alternate valuation date for federal estate tax purposes. Effective for
				estates of decedents dying after July 18, 1984, the alternate valuation date
				cannot be elected unless the value of the gross estate for federal estate tax
				purposes is reduced and the amount of federal estate tax owing, after all
				credits have been deducted, has also been reduced. See
				26 U.S.C. Section
				2032(c) enacted by
				Public Law
				98-369 Section 1023(a). In general, the alternate
				valuation date is six months after the date of the decedent's death. If
				property is sold within the six-month period, the date of sale is the alternate
				date for valuing the property sold. See federal regulation Section
				20.2032 -1, as amended December
				28, 1972, for the rules governing the valuation of property in the gross estate
				at its alternate valuation date for federal estate tax purposes. If the
				election is made, all of the property included in the gross estate and not just
				a portion of the property, must be valued at the alternate valuation date. The
				estate may elect both the alternate valuation date and the special use value
				under Iowa Code chapter 450B, if the estate is otherwise qualified. See Federal
				Revenue Ruling 83-31(1983). It is a precondition for valuing the property at
				its alternate value for Iowa inheritance tax purposes that the property has
				been valued at the alternate value for federal estate tax purposes. However,
				even if the property in the gross estate is valued at the alternate valuation
				date for federal estate tax purposes, the estate has the option either to elect
				or not to elect the alternate valuation date for Iowa inheritance tax purposes.
				If the alternate valuation date is elected, the value established for federal
				estate tax purposes shall also be the alternate value for inheritance tax
				purposes. The election is an affirmative act and for estates of decedents dying
				prior to July 19, 1984, it must be made on a timely filed inheritance tax
				return, taking into consideration any extensions of time granted to file the
				return. Effective for estates of decedents dying after July 18, 1984, the
				election may be made on the first return filed for the estate, regardless of
				whether the return is delinquent, providing the return is filed no more than
				one year after the due date, taking into consideration any extensions of time
				granted to file the return and pay the tax due. See
				26 U.S.C.
				2032(d) as amended by
				Public Law
				98-369 Section 1024(a). Failure to indicate on the
				inheritance tax return whether the alternate valuation date is elected shall be
				construed as a decision not to elect the alternate valuation date.
(2)
When not available.
a. The alternate valuation date provided for
				in 26 U.S.C. Section
				2032 cannot be elected by the estate if the
				tax on a future property interest has been deferred under Iowa Code sections
				450.44 to 450.49. The tax on a
				future property interest must be computed on the fair market value of the
				future property interest at the time the tax is paid.
In re Estate of
				Wickham,
241 Iowa 198, 40 N.W. 2d 469 (1950).
b. Real estate which is subject to an
				additional inheritance tax imposed by Iowa Code section
				450B.3 due to the early
				disposition or cessation of the qualified use cannot be valued at the alternate
				valuation date for purposes of the recapture tax, unless the alternate
				valuation date was originally elected on the return for the decedent's
				estate.
c. The alternate valuation
				date cannot be elected if the size of the gross estate for federal estate tax
				purposes, based on the fair market value of the assets at the time of death, is
				less than the minimum filing requirements under current federal authority. The
				fact that the gross estate for inheritance tax purposes is less than the
				minimum federal estate tax filing requirement is not relevant.
This rule is intended to implement Iowa Code sections
				  422.3 and
				  450.37.