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We hold that petitioner’s special use valuation election
encompassed the right to value the property under section
2032A(e)(8) in the event petitioner failed properly to document
comparable properties under section 2032A(e)(7). Because
petitioner failed to identify comparable properties sufficient
for purposes of section 2032A(e)(7), the property must be valued
under the rules of section 2032A(e)(8). See sec. 20.2032A-
4(b)(2)(i), Estate Tax Regs.
b. Special Use Valuation Under Section
2032A(e)(8)
Section 2032A(e)(8) sets forth five factors to be used in
measuring the value of real property used for farming or closely
held business purposes as follows:
(8) Method of valuing closely held business
interests, etc.-–In any case to which paragraph (7)(A)
does not apply, the following factors shall apply in
determining the value of any qualified real property:
(A) The capitalization of income which the
property can be expected to yield for farming or
closely held business purposes over a reasonable
period of time under prudent management using
traditional cropping patterns for the area, taking
into account soil capacity, terrain configuration,
and similar factors,
(B) The capitalization of the fair rental
value of the land for farmland or closely held
business purposes,
(C) Assessed land values in a State which
provides a differential or use value assessment
law for farmland or closely held business,
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