Tax Tid-Bits

IRS Grants Extension of Time to Elect Special Use Valuation

The IRS recently ruled in PLR 199952023 to grant an estate an extension of time to elect §2032A special use valuation where the estate’s executor had relied on a tax professional who had failed to make the election in time.

Section 2032A provides that qualified real property that is dedicated to farming shall be valued, for estate and gift tax purposes, on the basis of its use as a farm rather than at its highest and best use (fair market value). To receive this special use valuation, the executor must make a timely election.

In this case, the executor timely instructed the estate’s tax professional to make the §2032A election after determining that the election would benefit the estate. After the deadline had expired, the executor learned that the tax professional had failed to make the election. The estate then requested an extension from the IRS, which granted the extension based on evidence that the executor had acted reasonably and in good faith.