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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
to–-
(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