In short
Special use valuation lets an estate value farm or closely held business real estate at its value in its current use rather than its highest and best use, reducing the estate's value up to an inflation-adjusted limit.
Key takeaways
- The business property must make up at least 50% of the adjusted gross estate, and the real estate at least 25%.
- The decedent or a family member must have materially participated, and the property must pass to qualified heirs.
- The tax saved is recaptured if heirs sell the property or stop using it that way within 10 years.
Where it's tested
TCP: Estate & Gift Tax Planning — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A client's total estate is well below the $15 million exemption. The client asks whether to gift highly appreciated stock to children now or hold it until death. From a pure tax standpoint, which is generally better and why?