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For an estate of a decedent dying in calendar-year 2006, if the executor elects special-use valuation, the aggregate decrease in the value of qualified real property cannot exceed $900,000.
Beryl elected the special-use valuation (IRC section 2032A), which more than halved the farm's value for estate tax purposes.
Section 2032A special-use valuation requires, among other things, that the property pass to or be acquired by a "qualified heir' (a family member) from the decedent.
* The special-use valuation election allows qualifying real property to be valued according to its actual use, rather than its highest or best use, subject to restrictions.
This provision, called special-use valuation, can reduce or eliminate estate tax for estates containing qualified property used in family farms and businesses (e.g., campgrounds, parking lots, trailer parks, winter boat storage facilities or off-road driving parks).
Special-use valuation is not an "all or nothing" election.
Special-use valuation: An executor may elect to value real property used in a farm or business on the basis of the property's actual use, rather than its highest and best use.
Gifting and special-use valuation provisions vary not only among death tax systems, but also among the states within a category.
Special-use valuation provisions also vary among the states.
Although New Jersey does not allow special-use valuation, it values forest land according to comparable forest land sales and requires a recalculation of the estate tax if the land's use is changed.
2032A special-use valuation rules, if the triggering event occurs within two years of the decedent's death.
2032A recapture rule (previously discussed) applies, special-use valuation is completely disregarded for property valuation purposes.