Cases: United States v. Cartwright, 411 U.S. 546 (1973)
Final rules 6
(a) General The value of the gross estate of the decedent shall be determined by including to the extent provided for in this part, the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated.
Amended 1962
- 1962 Pub. L. 87-834 Pub. L. 87–834 struck out provisions which excepted real property situated outside the United States.
Cases: Estate of Jelke v. Commissioner, 507 F.3d 1317 (11th Cir. 2007)
(b) Valuation of unlisted stock and securities In the case of stock and securities of a corporation the value of which, by reason of their not being listed on an exchange and by reason of the absence of sales thereof, cannot be determined with reference to bid and asked prices or with reference to sales prices, the value thereof shall be determined by taking into consideration, in addition to all other factors, the value of stock or securities of corporations engaged in the same or a similar line of business which are listed on an exchange.
(c) Estate tax with respect to land subject to a qualified conservation easement
Amended 1976, 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34 added subsec. (c) and redesignated former subsec. (c) as (d).
- 1976 Pub. L. 94-455 Pub. L. 94–455 added subsec. (c).
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(1) In general If the executor makes the election described in paragraph (6), then, except as otherwise provided in this subsection, there shall be excluded from the gross estate the lesser of—
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(96), substituted “(II) $500,000.” for “(B) the exclusion limitation.”
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(A) the applicable percentage of the value of land subject to a qualified conservation easement, reduced by the amount of any deduction under section 2055(f) with respect to such land, or
(B) $500,000.
Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(200), substituted “(B) $500,000.” for “(II) $500,000.”
(2) Applicable percentage For purposes of paragraph (1), the term “applicable percentage” means 40 percent reduced (but not below zero) by 2 percentage points for each percentage point (or fraction thereof) by which the value of the qualified conservation easement is less than 30 percent of the value of the land (determined without regard to the value of such easement and reduced by the value of any retained development right (as defined in paragraph (5))). The values taken into account under the preceding sentence shall be such values as of the date of the contribution referred to in paragraph (8)(B).
Amended 2001, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(201), substituted “paragraph (5))).” for “paragraph (5)).”
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 551(b), inserted at end “The values taken into account under the preceding sentence shall be such values as of the date of the contribution referred to in paragraph (8)(B).”
[(3) Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(96), Dec. 19, 2014, 128 Stat. 4051]
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(96), struck out par. (3), which set out table of exclusion limitations.
(4) Treatment of certain indebtedness
(A) In general The exclusion provided in paragraph (1) shall not apply to the extent that the land is debt-financed property.
(B) Definitions For purposes of this paragraph—
(i) Debt-financed property The term “debt-financed property” means any property with respect to which there is an acquisition indebtedness (as defined in clause (ii)) on the date of the decedent’s death.
(ii) Acquisition indebtedness The term “acquisition indebtedness” means, with respect to debt-financed property, the unpaid amount of—
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(I) the indebtedness incurred by the donor in acquiring such property,
(II) the indebtedness incurred before the acquisition of such property if such indebtedness would not have been incurred but for such acquisition,
(III) the indebtedness incurred after the acquisition of such property if such indebtedness would not have been incurred but for such acquisition and the incurrence of such indebtedness was reasonably foreseeable at the time of such acquisition, and
(IV) the extension, renewal, or refinancing of an acquisition indebtedness.
(5) Treatment of retained development right
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(A) In general Paragraph (1) shall not apply to the value of any development right retained by the donor in the conveyance of a qualified conservation easement.
(B) Termination of retained development right If every person in being who has an interest (whether or not in possession) in the land executes an agreement to extinguish permanently some or all of any development rights (as defined in subparagraph (D)) retained by the donor on or before the date for filing the return of the tax imposed by section 2001, then any tax imposed by section 2001 shall be reduced accordingly. Such agreement shall be filed with the return of the tax imposed by section 2001. The agreement shall be in such form as the Secretary shall prescribe.
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(C) Additional tax Any failure to implement the agreement described in subparagraph (B) not later than the earlier of—
(i) the date which is 2 years after the date of the decedent’s death, or
(ii) the date of the sale of such land subject to the qualified conservation easement,
shall result in the imposition of an additional tax in the amount of the tax which would have been due on the retained development rights subject to such agreement. Such additional tax shall be due and payable on the last day of the 6th month following such date.
(D) Development right defined For purposes of this paragraph, the term “development right” means any right to use the land subject to the qualified conservation easement in which such right is retained for any commercial purpose which is not subordinate to and directly supportive of the use of such land as a farm for farming purposes (within the meaning of section 2032A(e)(5)).
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(6) Election The election under this subsection shall be made on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return. Such an election, once made, shall be irrevocable.
Amended 1998
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6007(g)(2), substituted “on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return.” for “on the return of the tax imposed by section 2001.”
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(7) Calculation of estate tax due An executor making the election described in paragraph (6) shall, for purposes of calculating the amount of tax imposed by section 2001, include the value of any development right (as defined in paragraph (5)) retained by the donor in the conveyance of such qualified conservation easement. The computation of tax on any retained development right prescribed in this paragraph shall be done in such manner and on such forms as the Secretary shall prescribe.
(8) Definitions For purposes of this subsection—
(A) Land subject to a qualified conservation easement The term “land subject to a qualified conservation easement” means land—
(i) which is located in the United States or any possession of the United States,
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 551(a), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: “which is located—
“(I) in or within 25 miles of an area which, on the date of the decedent’s death, is a metropolitan area (as defined by the Office of Management and Budget),
“(II) in or within 25 miles of an area which, on the date of the decedent’s death, is a national park or wilderness area designated as part of the National Wilderness Preservation System (unless it is determined by the Secretary that land in or within 25 miles of such a park or wilderness area is not under significant development pressure), or
“(III) in or within 10 miles of an area which, on the date of the decedent’s death, is an Urban National Forest (as designated by the Forest Service),”.
(ii) which was owned by the decedent or a member of the decedent’s family at all times during the 3-year period ending on the date of the decedent’s death, and
(iii) with respect to which a qualified conservation easement has been made by an individual described in subparagraph (C), as of the date of the election described in paragraph (6).
(B) Qualified conservation easement The term “qualified conservation easement” means a qualified conservation contribution (as defined in section 170(h)(1)) of a qualified real property interest (as defined in section 170(h)(2)(C)), except that clause (iv) of section 170(h)(4)(A) shall not apply, and the restriction on the use of such interest described in section 170(h)(2)(C) shall include a prohibition on more than a de minimis use for a commercial recreational activity.
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(C) Individual described An individual is described in this subparagraph if such individual is—
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(i) the decedent,
(iii) the executor of the decedent’s estate, or
(iv) the trustee of a trust the corpus of which includes the land to be subject to the qualified conservation easement.
(D) Member of family The term “member of the decedent’s family” means any member of the family (as defined in section 2032A(e)(2)) of the decedent.
(9) Treatment of easements granted after death In any case in which the qualified conservation easement is granted after the date of the decedent’s death and on or before the due date (including extensions) for filing the return of tax imposed by section 2001, the deduction under section 2055(f) with respect to such easement shall be allowed to the estate but only if no charitable deduction is allowed under chapter 1 to any person with respect to the grant of such easement.
Amended 1998
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6007(g)(1), added par. (9). Former par. (9) redesignated (10).
(10) Application of this section to interests in partnerships, corporations, and trusts This section shall apply to an interest in a partnership, corporation, or trust if at least 30 percent of the entity is owned (directly or indirectly) by the decedent, as determined under the rules described in section 2057(e)(3) (as in effect before its repeal).
Amended 1998, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(97)(B), inserted “(as in effect before its repeal)” before period at end.
- 1998 Pub. L. 105-277 Pub. L. 105–277, § 4006(c)(3), substituted “section 2057(e)(3)” for “section 2033A(e)(3)”.
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6007(g)(1), redesignated par. (9) as (10).
(d) Cross reference For executor’s right to be furnished on request a statement regarding any valuation made by the Secretary within the gross estate, see section 7517.
Amended 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34 added subsec. (c) and redesignated former subsec. (c) as (d).