By: Martin M. Shenkman, CPA, MBA, JD
When someone dies their assets are valued for estate tax purposes as of the date of their death. However, there is a special election which permits the executor or other fiduciary for the estate to value estate assets as of a date 6 months following death. This is called the "alternate valuation date" or sometimes the "alternate valuation method", or "AVM" for short. Using this election, the estate assets can generally be valued six months following death. If the value of assets has declined significantly post death, this can provide a tremendous estate tax savings. The AVM election, once made, is irrevocable. In order to make this election the value of the gross estate (everything the decedent owned) and the tax due, both must be lower at the alternate valuation date then at the date of death. The special rules governing this are contained in Code Section 2032.
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