Page 15 - Business Valuation for Estates & Gift Taxes

IRC Section 170 (Subtitle A)

This section provides definitions of qualified appraiser and qualified appraisal. Although these defini-
tions originated in the charitable contribution regulations, the Pension Protection Act of 2006 restated
the definition of qualified appraisal and further defined the qualifications of appraisers performing tax-
related valuations.

According to IRC Section 170

 a qualified appraisal is an appraisal which is treated as a qualified appraisal under regulations or
other guidance, and is conducted by a qualified appraiser in accordance with generally accepted
appraisal standards and any regulations or other guidance. fn 1

 a qualified appraiser is an individual who has earned an appraisal designation from a recognized
professional appraiser organization or has otherwise met minimum education and experience re-
quirements, regularly performs appraisals for which the individual receives compensation, and
meets such other requirements as may be prescribed in regulations or other guidance. fn 2

IRC Section 2031 (Chapter 11)

This section contains guidance on what is to be included in the decedent’s gross estate for estate tax pur-
poses. IRC Section 2031(a) states that when determining the value of a decedent’s gross estate, the value
of all property, real or personal, tangible or intangible, must be included.

IRC Section 2031(b) states that the value of unlisted stock and securities can be determined by taking in-
to consideration the value of exchange traded stock or securities of corporations engaged in the same or
a similar line of business.

IRC Section 2032 (Chapter 11)

This section allows the executor of an estate to elect to use an alternate valuation date. IRC Section
2032(a) states that a date six months after the decedent’s death may be used to value the property as long
as the use of the later date results in a lower value of the gross estate and a lower tax burden to the es-
tate. When the alternate valuation date is elected, that date must be applied to all assets in the estate ex-
cept those sold before the alternate valuation date.

IRC Section 2036 (Chapter 11)

This section is often used by the IRS to determine whether a decedent’s transfer of assets prior to death
should actually be included in the value of the decedent’s gross estate. IRC Section 2036(a) states that
the value of that property shall be included in the decedent’s estate if the decedent

 has retained the possession or enjoyment of the property,

fn 1
IRC Section 170(f)(11)(E)(i).
fn 2 IRC Section 170(f)(11)(E)(ii). It is worth noting that the IRS does not specifically identify credentials or member organizations
when it defines "qualified appraiser." Instead this section of the IRC establishes baseline criteria for professionals to meet.

Page 13 ©2015, AICPA