Estate of Pattie Welder Edwards - Page 8

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          properties that should be disregarded for estate tax valuation              
          purposes under section 2703.                                                
               The value of a decedent’s gross estate includes the value of           
          all of the decedent’s interest in property.  Secs. 2031, 2033.              
          The value of property is the fair market value at the date of the           
          decedent’s death.  Sec. 20.2031-1(b), Estate Tax Regs.  The fair            
          market value of property is defined as “the price at which the              
          property would change hands between a willing buyer and a willing           
          seller, neither being under any compulsion to buy or to sell and            
          both having reasonable knowledge of relevant facts”.  Id.                   
          Intrafamily agreements must be subjected to greater scrutiny than           
          that afforded similar agreements between unrelated parties.  See            
          Harwood v. Commissioner, 82 T.C. 239, 259 (1984), affd. without             
          published opinion 786 F.2d 1174 (9th Cir. 1986); Estate of                  
          Tiffany v. Commissioner, 47 T.C. 491, 499 (1967).                           
               Section 2703(a) provides guidance on the valuation of                  
          properties that are subject to restrictions and states:                     
                         SEC. 2703(a).  General Rule.–-For                            
                    purposes of this subtitle, the value of any                       
                    property shall be determined without regard                       
                         (1) any option, agreement, or other right to                 
                    acquire or use the property at a price less than                  
                    the fair market value of the property (without                    
                    regard to such option, agreement, or right), or                   
                         (2) any restriction on the right to sell or                  
                    use such property.                                                

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Last modified: May 25, 2011