Alternate Valuation Date Regulations

Prof. Wendy Gerzog (Professor of Law, University of Baltimore School of Law) has recently posted on SSRN her article entitled The New Regs on Alternative Date Valuation which also appears in Tax Notes, Vol. 120, No. 797, 2008.

Here is the abstract of her article:

Treasury recently announced proposed regulations under section 2032 explaining valuation rules for assets when the decedent elects to apply the alternate valuation date. The regulations first provide background information about the statute, including legislative history and case law interpretation, and then underline their departure from Kohler, a 2006 Tax Court memorandum decision.

Prof. Gerzog concludes:

The proposed regulations are intended to state explicitly that alternative date valuation under section 2032 disregards all postdeath events, including a post-death corporate reorganization, if the changes in valuation due to those postdeath events do not reflect market conditions. They accomplish that purpose. Voluntary valuation depressions, such as those involved in Kohler or family limited partnerships, are not relevant to section 2032 alternate date valuation, because they are contrary to the purpose of that statute: to create relief for taxpayers whose estates have diminished solely due to market conditions shortly after the decedent’s death.