Estates, Gifts, And Trusts (EGT)

Valuation: General and Real Estate (Portfolio 830)

  • This Portfolio reviews the methods commonly used in the valuation of assets, including real estate.


Tax Management Portfolio, Valuation: General and Real Estate, No. 830, reviews the methods commonly used in the valuation of assets, including real estate. The fair market value of an asset ultimately determined must be one which fits within the definition of what a willing buyer would pay to a willing seller for the asset, neither being under any compulsion to buy or sell, with both parties having a reasonable knowledge of all relevant facts. In the case of real estate, the value generally is based upon the highest and best use of the property.

This portfolio outlines the various methodologies and approaches to valuation, and applies them to the valuation of specific types of real and personal property interests. This portfolio is also designed to assist tax practitioners and their clients with the issues involved in valuing assets for federal income, estate, gift, and generation-skipping tax planning purposes, to prepare informal estimates of value and valuation calculations in an effort to settle differences with the IRS during audit and prior to trial, and to work with qualified appraisers in connection with the preparation of a more formal appraisal for use either at audit or in a trial in the matter. Brief consideration is given to special use valuation of real estate under §2032A, to the special valuation rules of Chapter 14, and to the penalties that may be imposed for inaccurate valuations.

The Worksheets include samples of valuation reports and excerpts from various IRS documents, including audit guidelines, that provide insight into the IRS’s valuation procedures.

This portfolio is to be used in conjunction with 833 T.M., Section 2032A — Special Use Valuation; 831 T.M., Valuation of Corporate Stock; 809 T.M., Estate Planning for Owners of Closely Held Business Interests; 835 T.M., Transfers of Interests in Family Entities Under Chapter 14: Sections 2701, 2703 and 2704; and 836 T.M., Partial Interests — GRATs, GRUTs, QPRTs (Section 2702).

This portfolio may be cited as Kelley, 830 T.M., Valuation: General and Real Estate.

Table of Contents

I. Introduction
II. General Rules of Valuation
III. Special Use Valuation of Real Estate – § 2032A
IV. Special Valuations Rules – Chapter 14
V. Specific Types of Property
VI. Accuracy-Related Penalties
VII. Appraisals and Expert Witnesses; Appraisal Standards; Appraisal Process
VIII. Other Tax Issues

Carol Kelley
Carol Kelley
Buchanan Ingersoll & Rooney PC
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