Estate received relief for a late alternate-valuation election

Plain-English summary

An executor hired an attorney to administer an estate and an accountant to prepare Form 706. Neither adviser told the executor to make the Section 2032 alternate-valuation election, so the timely original estate-tax return omitted it. The executor later filed an amended Form 706 making the election less than one year after the return deadline. The IRS found reasonable professional reliance and granted an extension through the amended-return date. The ruling did not decide whether alternate valuation actually reduced the gross estate and applicable taxes or which valuation date applied.

Ruling snapshot

• Question: Could the estate make a late Section 2032 alternate-valuation election after its advisers failed to recommend it?
• Outcome: approved
• Key authorities: IRC § 2032(a), (c), and (d); Treas. Reg. §§ 20.2032-1(b)(3) and 301.9100-1 through 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                      Department of the Treasury
                                                               Washington, DC 20224

 Number: 202410006                                             Third Party Communication: None
 Release Date: 3/8/2024                                        Date of Communication: Not Applicable
 Index Number: 2032.00-00, 9100.00-00
                                                               Person To Contact:
 ----------------------------------------                      ---------------------, ID No. -----------------
 ----------------------------------                            Telephone Number:
 ------------------------                                      --------------------
 -------------------------------                               Refer Reply To:
                                                               CC:PSI:B04
 ----------------------------------------------------          PLR-113267-23
                                                               Date:
                                                               December 07, 2023


Legend

Decedent         =        ----------------------------------
                          -------------------------
Son              =        --------------------------
Attorney         =        ---------------------
Accountant       =        --------------
Date 1           =        ---------------------
Date 2           =        -------------------
Date 3           =        -------------------

Dear --------------------:

      This responds to the June 12, 2023 letter from your authorized representative,
and other correspondence, requesting an extension of time under § 301.9100 of the
Procedure and Administration Regulations to make an alternate valuation election under
§ 2032 of the Internal Revenue Code.

        The facts and representations submitted are summarized as follows:

        Decedent died on Date 1. Decedent’s son (Son) served as the executor of
Decedent’s estate. Son retained Attorney to handle the administration of Decedent’s
estate and Accountant to prepare Decedent’s Form 706. Accountant and Attorney
failed to advise Son to make an alternate valuation election under § 2032. Son timely
filed Decedent’s Form 706 (United States Estate (and Generation-Skipping Transfer)
Tax Return) on Date 2 without making an alternate valuation election under § 2032.
Subsequently, on Date 3, Son filed supplemental information on an amended Form 706
making an alternate valuation election under § 2032. Date 3 is less than one year after
the time prescribed by law (including extensions) for filing the estate tax return.

PLR-113267-23                            2

LAW AND ANALYSIS

       Section 2032(a) provides, in part, that the value of the gross estate may be
determined, if the executor so elects, by valuing all the property included in the gross
estate as follows:

   (1) In the case of property distributed, sold, exchanged, or otherwise disposed of,
       within 6 months after the decedent's death such property shall be valued as of
       the date of distribution, sale, exchange, or other disposition.

   (2) In the case of property not distributed, sold, exchanged, or otherwise disposed
       of, within 6 months after the decedent's death such property shall be valued as of
       the date 6 months after the decedent's death.

       Section 2032(c) provides that no election may be made under § 2032 with
respect to an estate unless the election will decrease: (1) the value of the gross estate;
and (2) the sum of the federal estate tax and the generation-skipping transfer tax
imposed on the estate with respect to property includible in the decedent's gross estate
(reduced by credits allowable against such taxes).

       Section 2032(d)(1) provides that an election under § 2032 shall be made by the
executor on the return of tax imposed by § 2001. Under § 2032(d)(2), no election may
be made under § 2032 if the return is filed more than 1 year after the time prescribed by
law (including extensions) for filing the return.

       Section 20.2032-1(b)(3) of the Estate Tax Regulations provides that a request for
an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 will not be granted
unless the estate tax return is filed no later than 1 year after the due date of the return
(including extensions actually granted).

        Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of
time to make a regulatory election, or statutory election (but no more than 6 months
except in the case of a taxpayer who is abroad), under all subtitles of the Internal
Revenue Code except subtitles E, G, H, and I, if the taxpayer demonstrates to the
satisfaction of the Commissioner that the taxpayer has acted reasonably and in good
faith, and granting relief will not prejudice the interests of the government.

       Sections 301.9100-1 through 301.9100-3 provide the standards the
Commissioner will use to determine whether to grant an extension of time to make an
election.

       Section 301.9100-2 provides an automatic extension of time for making certain
elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of § 301.9100-2.

PLR-113267-23                            3

        Requests for relief under § 301.9100-3 will be granted when the taxpayer
provides the evidence to establish to the satisfaction of the Commissioner that the
taxpayer acted reasonably and in good faith, and that granting relief will not prejudice
the interests of the government.

      Section 301.9100-3(b)(1)(v) provides that a taxpayer is deemed to have acted
reasonably and in good faith if the taxpayer reasonably relied on a qualified tax
professional, including a tax professional employed by the taxpayer, and the tax
professional failed to make, or advise the taxpayer to make, the election.

       Based on the facts submitted and the representations made, we conclude that
the standards of §§ 301.9100-1 and 301.9100-3 have been satisfied. In addition, the
estate tax return was filed no later than 1 year after the due date of the return (including
extensions actually granted). Consequently, Son is granted an extension of time to
Date 3 for making the alternate valuation election under § 2032. A copy of this letter
along with a copy of the filed amended Form 706 should be forwarded to: Department of
the Treasury, Internal Revenue Service, Stop 824G, 7940 Kentucky Drive, Florence, KY
41042-2915.

       Except as expressly provided herein, no opinion is expressed or implied
concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter. Specifically, we express no opinion concerning whether
Decedent’s estate is entitled to value Decedent’s assets on an alternate valuation date
(such conclusion depending, in part, on those factors listed in § 2032(c)). Similarly, we
express no opinion concerning the alternate valuation date (such conclusion depending
upon those factors listed in § 2032(a)).

       The ruling contained in this letter is based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the request for rulings, it is subject to verification on examination.

       This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.

PLR-113267-23                                            4

         In accordance with the Power of Attorney on file with this office, a copy of this
letter is being sent to your authorized representative.

                                                Sincerely,

                                                Associate Chief Counsel
                                                Passthroughs & Special Industries


                                          By: ______________________________
                                              Leslie H. Finlow
                                              Senior Technician Reviewer, Branch 4
                                              Office of the Associate Chief Counsel
                                              (Passthroughs & Special Industries)

Enclosure (1)
       Copy for § 6110 purposes.


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