Rev. Rul. 85-84

1985-1 C.B. 326, 1985-25 I.R.B. 8.

SPECIAL USE VALUATION; NOTICE OF ELECTION

Published:  June 24, 1985

Section 2032A.-Valuation of Certain Farm, Etc., Real Property, 26 CFR 20.2032A- 8. Election and Agreement to Have Certain Property Valued under Section 2032A for Estate Tax Purposes.

  Special use valuation; notice of election. An executor of an estate may perfect an election of special use valuation within the required time period where the notice of election failed to contain a legal description of the qualifying real property.

ISSUE

  For purposes of section 2032A of the Code, has an estate satisfied the requirements for specially valuing qualifying property where the notice of election failed to contain a legal description of the property?

FACTS

  The decedent died in 1982, devising a farm to A. A is the only qualified heir of the decedent within the meaning of section 2032A(e)(1). The executor of the estate timely filed an estate tax return and elected to specially value the qualifying farm property by checking the appropriate boxed on the return. In addition, the executor attached to the return both the notice of election and the agreement to specially value the property. The notice of election failed to include a legal description of the specially valued property, although it described the property in detail. In addition, the schedule for real property attached to the return included a full legal description of the specially valued property.

LAW AND ANALYSIS

  Section 2032A of the Internal Revenue Code provides that when certain conditions are met, an executor may elect to value farm or business property based on its current use, rather than its fair market value determined under otherwise applicable estate tax valuation rules.

  Section 2032A(d)(1) of the Code provides that an election to specially value qualified property shall be made on the estate tax return in the manner prescribed by regulations. In addition, section 2032A(d)(2) provides that a written agreement consenting to a recapture tax, if the conditions specified in section 2032A(c) are met, must be filed with the estate tax return.

  Section 2032A(d)(3) of the Code provides that where the estate has substantially complied with the requirements in the regulations for filing the notice of election and the agreement within the time prescribed for filing such election, the executor may perfect the filing by providing the necessary information or agreements within a reasonable period of time (not exceeding 90 days) after notification that all the requirements for filing have not been satisfied.

  Section 20.2032A-8(a)(3) of the Estate Tax Regulations describes the time and manner of making the required election and agreement. It sets out specific information which must be submitted in order to make a valid election. Among the information required to be submitted to validate the notice of election is the submission of a legal description of the specially valued property.

  The decedent's estate clearly indicated on the return that it had specially valued qualifying real property under section 2032A and had complied with all the requirements for making the election except the requirement that a legal description of the property to be specially valued be attached to the return. Although a legal description was not a part of the election, this property was described in sufficient detail on both the notice of election and another portion of the estate tax return. Because the property was described with reasonable clarity in the notice of election and all other required information has been submitted, the estate has substantially complied with the requirements for filing the notice.

  Accordingly, the estate may perfect the notice of election by submitting a legal description of the property within a reasonable period of time (not exceeding 90 days) after notification that the election, as originally filed, did not contain all the required information.

HOLDING

  For purposes of section 2032A(d)(1) of the Code, where the notice of election of special use valuation fails to contain a required legal description of the qualifying real property, the executor of the estate may perfect the election within the required time period if the original notice of election included a reasonably clear description of the property.

Rev. Rul. 85-84, 1985-1 C.B. 326, 1985-25 I.R.B. 8.