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The first of these methods is the formula method under
section 2032A(e)(7). This method is based upon the
capitalization of rents of comparable properties. The method is
based on a strict formula (objective factors), and the formula is
set forth in the statute and the regulations.
Under the formula method, the special use value is
determined by reference to the cash rents of comparable
properties. The special use value of the property is determined
mathematically by taking the excess of:
(1) The average annual gross cash rental for comparable
land used for farming purposes and located in the locality of
such farm, over
(2) the average annual State and local real estate taxes
for such comparable property.
5(...continued)
(II) the cash operating expenses of
growing such produce which, under the lease,
are paid by the lessor.
(C) Exception.-–The formula provided by
subparagraph (A) shall not be used–-
(i) where it is established that there is no
comparable land from which the average annual
gross cash rental may be determined and that there
is no comparable land from which the average net
share rental may be determined, or
(ii) where the executor elects to have the
value of the farm for farming purposes determined
under paragraph (8).
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