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Estate Tax Regs. The fact that the highest and best use of real
property may coincide with its special use, as here, does not
preclude special use valuation under section 2032A. Sec.
20.2032A-3(a), Estate Tax Regs.
Section 2032A was added to the Code 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 taxes. Estate of Mapes v. Commissioner, 99 T.C. 511,
516-617 (1992); H. Rept. 94-1380, supra, 1976-3 C.B. (Vol. 3) at
755-756; S. Rept. 94-938 (Part 2), supra, 1976-3 C.B. (Vol. 3) at
657.
Although section 2032A is a relief statute designed to
encourage, among other things, the continuation of family farms,
it provides for "exceptionally favorable tax treatment", and
taxpayers must "come within its demanding terms". Martin v.
Commissioner, 783 F.2d 81, 82, 84 (7th Cir. 1986), affg. 84 T.C.
620 (1985). An estate must meet a number of conditions for
property to be eligible for special use valuation: (1) The
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Last modified: May 25, 2011