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21, 1991, in which a deficiency in Federal estate tax was
determined in the amount of $93,866.
Discussion
Generally, a decedent's gross estate subsumes the fair
market value of the decedent's interest in all property in which
he owned an interest at the time of death. Secs. 2032(a), 2033.
However, in the case of certain real property used by the
decedent or a member of his family for farming or in a closely
held business, section 2032A allows the decedent's personal
representative to elect to value the real property on the basis
of its value as a farm or in the closely held business, rather
than the fair market value of such property based on its "highest
and best use". Sec. 2032A(e)(7) and (8); Stovall v.
Commissioner, 101 T.C. 140, 146 (1993); sec. 20.2032A-3(a),
Estate Tax Regs.
Section 2032A was added by the Tax Reform Act of 1976, Pub.
L. 94-455, sec. 2003, 90 Stat. 1520, 1856. The purpose of the
special valuation provision is to reduce the estate tax burden,
thereby alleviating liquidity problems faced by the surviving
family of a person who dies owning real property used as a farm
or in a closely held business. H. Rept. 94-1380 at 21-22 (1976),
1976-3 C.B. (Vol. 3) 735, 755-756; S. Rept. 94-938 (Part 2), at
15 (1976), 1976-3 C.B. (Vol. 3) 643, 657. Congress sought to
allow the family to continue operating the farm or other
business, rather than force the sale of the land to pay estate
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