1.1014-1 is that the "basis of property acquired from a decedent is the fair market value of such property at the date of the decedent's death" (or the alternative valuation date
When you get a gift, find out the giver's basis in that asset; after an inheritance, document the date of death value (or the value on the alternative valuation date
, as explained in the "Second Look" Trusted Advice column herein).
At the end of a week of trial, the jury found the value of the property to be $25 million as of the alternative valuation date
(2ai) If an estate tax return is filed and the executor elects the alternative valuation (see Q 7602), the basis is the fair market value on the alternative valuation date
instead of its value on the date of death.
It is important to note that once the election is made to opt for the alternative valuation date
, it is irrevocable and must apply to all the property in the Estate uniformly.
By the time these trusts are funded, several years could have passed since the first spouse's death, and the appraisals and values used at date-of-death, or the alternative valuation date
, are no longer current.
The value for such purposes is the date-of-death fair market value (FMV) (or, if an election is made under IRC section 2032, the FMV on the "alternative valuation date
," six months later).
Generally, deductions from a gross estate for federal estate tax purposes are valued as of the date of death of the decedent or at the alternative valuation date
six months later.
Table 3: Comparison Option Values Using Alternative Valuation Dates
and Methods Valuation date Vesting date Grant date Black-Scholes model Example 2 Example 4 using MRT $4.84 per share $3.93 per share $2,420,000 $1,965,000 Black-Scholes model Example 3 Example 5 using CEL $4.38 per share $3.38 per share $2,190,000 $1,690,000 Intrinsic value Example 1 Example 1 $2.00 per share $0 per share $1,000,000 $0
The three obvious alternative valuation dates
(i.e., the date on which the option value and corresponding compensation cost are firmly established) are the date the option is initially granted, the date on which all vesting requirements are met, and the date on which the option is exercised.