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IV. The Special Use Valuation
A. Introduction
The last issue for decision concerns petitioner’s election
to value the interests in certain ranch properties under section
2032A. On its Form 706, petitioner elected special use valuation
for several properties, claiming that it is entitled to the
$750,000 reduction in value for special use under section 2032A.
Respondent contends that petitioner may not take advantage of
section 2032A because it failed to comply with the statutory and
regulatory requirements for an election pursuant to that section.
Section 2032A allows an executor to elect to value real
property on the basis of its value for farming purposes rather
than its fair market value. See Stovall v. Commissioner, 101
T.C. 140, 146 (1993); sec. 20.2032A-3(a), Estate Tax Regs. A
reduction of up to $750,000 is permitted.16 See sec. 2032A(a)(2).
Congress enacted the provisions allowing special use valuation
with the goal of reducing the estate tax burden on small family
farms and businesses, thereby limiting the liquidity problems and
forced sales of those businesses, with the ultimate goal of
allowing continued family operation of the qualifying farms and
16Sec. 501(b) of the Taxpayer Relief Act of 1997, Pub. L.
105-34, 111 Stat. 846, amended sec. 2032A(a) to provide an
adjustment for inflation, effective for estates of decedents
dying after Dec. 31, 1997. As decedent died before the effective
date, the adjustment for inflation is not applicable.
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