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TAX MATTERS

the Sec. 2032A special-use valuation On Nov. 15, 2021, the government
election for the qualified farm prop- filed a civil action to collect the unpaid
erty. Accordingly, the farm property’s tax liabilities.
value was adjusted downward from the Issues: The estate, in its response
fair market value at the date of death. to the IRS’s complaint, admitted that
The estate claimed an overpayment of the estate tax return was filed over five
estate tax in the amount of $87,838. years late but contended that the Sec.
The IRS sent a notice of deficiency 2032A election for special-use valuation
to the estate for additional tax of was timely filed because the election
$199,111. The IRS denied the use of was made on the estate’s first estate tax
the special-use valuation election on return filed and that the estate owed no
the grounds that the return was not taxes, penalties, or interest.
timely filed and accordingly increased The estate based its argument on
the taxable estate by the amount the Temp. Regs. Sec. 22.0(b), which states
Late special-use property value had been adjusted down that the Sec. 2032A election is valid on
valuation permitted by the special-use valuation. The notice the first estate tax return filed even if
also included a late-filing penalty of it is late. The government argued that
A district court allows the $27,818. The tax penalties remained the Sec. 2032A election is not valid on
election for qualified real unpaid, and the balance due exceeded a late return. It further asserted that
property on an estate return filed $400,000 by October 2021. Temp. Regs. Sec. 22.0(b) (which was
more than five years late.

By Mani Gupta, CPA, and David R.
Silversmith, CPA
A U.S. district court held that the IRS digital interactions with taxpayers offer savings
election for special-use valuation of
Fiscal 2016
qualified real property under Sec.
2032A was timely despite being made
384
on a federal estate tax return that was
filed more than five years late.
Facts: Merle L. Parks died on Sept.
19, 2003. Under the provisions of his
will, his nephew, Ronald G. Parks, inher-
ited three parcels of farmland and other
assets. The estate tax return, Form 706,
United States Estate (and Generation-
Skipping Transfer) Tax Return, was due
nine months after his death, on May 19,
$68
2004. The estate requested and received 64 $57
a six-month extension to file the tax
$42
return. On June 22, 2004, the estate
made a prepayment of federal estate
7.9 4.5
tax of $333,959. However, the estate $0.20
neither filed the estate tax return by the Assistor calls Correspondence Taxpayer Assistance Digital
Center personal IMAGES BY ILLUSTRATOR DE LA MONDE/GETTY IMAGES
extended due date nor asked for any
contact
further extension to file.
 Cost per interaction  Number of interactions (millions)
The estate finally filed the return
more than five years later in February Source: IRS Strategic Plan for FYs 2018–2022; Treasury Inspector General for Tax Administration,
2010. The filing reported a taxable Rep’t No. 2023-30-003, Figure 1.
estate of $1,664,059 and included

38 | Journal of Accountancy March 2023