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Code Summary:
Code Section 2032A allows relatives that are lineal decedents to elect a
special use valuation for acquired farm property. To qualify for the special
use valuation, the adjusted gross value of the decedent’s estate must have been
at least 50 percent farm property.  In addition,
the decedent or lineal descendent must have maintained active engagement in
farm operations for at least 25% of the farm property. The active engagement in
farm operations must have been consistent for 5 years in an 8-year period
preceding the decedent’s date of death. If the special use valuation is made, all
persons that have an interest in the property must complete and sign all necessary
documentation to make the election valid. The relative must continue farming
activities, remain heavily engaged in farm operations, and pass interests to lineal
descendants once that relative wants to relinquish their interest. If the
relative fails to abide by the rules, then the election will become invalid and
an additional estate tax will be imposed.

Guidance to the Taxpayer:
Cameron Jones, the daughter and only child of Bob Jones, should verify that she
is to receive interest in the farm property. Once Cameron is verified as a lineal
descendent, she should make sure that the adjusted gross value of her father’s
estate was comprised of at least 50 percent of farm property. In addition,
Cameron should confirm that Bob maintained ownership and active engagement in
farm operations for at least 25% of the farm property. If these requirements
are met, Cameron should elect the special use valuation to reduce her tax
liability. To stove off tax liability, Cameron must maintain the farming
activities on the property, maintain substantial engagement in the farm
operations, and correctly pass her interest to another lineal descendent when
she decides to relinquish her interests.

Case Summary:
In Cowser, EST OF v. Comm., 54 AFTR 2d 84-6474 Patricia Tucker, the grandniece
of Ralph D. Cowser, attempted to elect the special use valuation for the family
farm that was passed to her by Ralph D. Cowser. However, Tucker was related to Cowser
by marriage, not lineage. Because Tucker was not a lineal descendant of Cowser,
she was not allowed to elect a special use valuation for the farm property. Patricia
Tucker appealed the decision, but the Tax Court maintained that Tucker was not
eligible for the special use valuation.  In
the case of Cameron Jones, it would be in her best interest to make sure that she
leaves the farm property to a family member that is a lineal descendent of her
father, Bob Jones. This strategy may ensure the option to a special use
valuation for subsequent lineal descendants. 

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