Discussion:Don't agree with estate appraisal. What to do?
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Discussion Forum Index --> Tax Questions --> Don't agree with estate appraisal. What to do?
| 7 August 2008 | |
| I'm working on an estate trust return (Form 1041) and the appraisals they provided me seem a little low. The real estate was all sold within 5-7 months of the date of death. Based on the appraisals, I'm showing some healthy capital gains.
Either the appraisals are wrong, or the estate representative was a hell of a salesman. I can't see local farm land prices taking the kind of jump in 5-7 months that I'm getting using the appraisals. How would you approach this? Ask for new appraisals? Ignore the appraisals? Or use the appraisals and tell the client to "take it"? We don't have a estate tax problem as the gross estate is less than $2,000,000, so the appraisals weren't lowballed to avoid estate tax. | |
RoyDaleOne (talk|edits) said: | 7 August 2008 |
| The appraiser were not given the sale data? | |
| 7 August 2008 | |
| I think farm land is increasing pretty rapidly, depending on location. I was reading an article about that this week, but I couldn't find it. Here's one I found that's fairly recent http://www.bizjournals.com/sacramento/stories/2008/07/28/focus2.html?ana=from_rss I am sure there are other articles out there, if you do a careful search.
There are times when an appraisal is very hard to do, and one of those times is when prices take off in either direction. GIGO. Read all the fine print in the original appraisal. I'd call the appraiser up and discuss it with him/her. | |
| 7 August 2008 | |
| Appraisals are guesses, sales are facts. The decision is the client's prerogative. | |
| 7 August 2008 | |
| Date of death was April of 2007. Appraisals were done June of 2007. Real estate was sold in September, October, December of 2007.
I talked to an appraiser (not the one that wrote the appraisal) and he said the kind of jump in value I'm getting from April to December of 2007 is reasonable because land prices took off in the fall of 2007 because of the huge runup in grain prices at that time. Looks like the client is gonna have to take it. | |
RoyDaleOne (talk|edits) said: | 7 August 2008 |
| Alternate valuation date not available? | |
| 7 August 2008 | |
| I believe under 2032 you have to have a reduction in the gross estate and a reduction in federal estate tax to claim the alternate valuation date. If farmland is escalating that rapidly I doubt if you have a reduction in the gross estate by valuing the estate six months after death. | |
RoyDaleOne (talk|edits) said: | 7 August 2008 |
| Yes Tj but consider,
This election is valuable whenever there is a decline in the value of key assets following death. Under the Alternate Valuation Date (AVD), once the election is made, all assets and deductions must be valued at the AVD. However, any assets which are sold or distributed after death and before the AVD is elected, must be valued as of the sale or distribution date. So the test is, is there a reduction in value in the assets remaining in the estate at the AVD? < --- Is this a correct understanding? | |
| 8 August 2008 | |
| Sec. 2032(c)
(c) Election must decrease gross estate and estate tax No election may be made under this section with respect to an estate unless such election will decrease - (1) the value of the gross estate, and (2) the sum of the tax imposed by this chapter and the tax
imposed by chapter 13 with respect to property includible in the
decedent's gross estate (reduced by credits allowable against
such taxes).
| |
RoyDaleOne (talk|edits) said: | 8 August 2008 |
| In the facts as stated there is no estate tax after credit, therefore, the use of the VD is not allowed. Is this correct?
FYI. This Section was in response to stock market crash of 1929. | |
| 8 August 2008 | |
| Hi first of all the taxpayers got bad estate/tax advice. You all know we have 9 months to "value" any estate property. When the properties were put on the market and all sold eithin 9 months what better "appraisal" to use to file the 706 or document FMV at death than a sale 5,6, and 8 months later. I would have no problem using the sale price as DofD value and end up with a loss. An appraisal is someones educated guess that can now be corrected by a true willing buyer and seller within a responable time frame. bye | |
| 8 August 2008 | |
| Property was sold within a resonable time of dod. I'd say there is a step up in basis which equals the selling price of the real estate. | |
