Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 86 - Inheritance Tax › Rule 701-86.10 - 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 45 OB, 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
				45044. to
				45049.. 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
				450B3.
				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.