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Authors

Neil HarlFollow

Abstract

The special use valuation statute clearly contemplates that land held by an entity should be eligible for special use valuation. However, regulations have not been issued providing guidance on the procedure for valuing land held by a corporation, partnership or trust even though the issuance of regulations was mandated in the statute, enacted in 1976. Other than for a Tax Court case holding that a corporation could not utilize special use valuation and at the same time claim a minority discount, until the issuance of a 1992 private letter ruling, estates have been forced to rely on the general guidance in the statute itself in making special use valuation elections involving stock, particularly with respect to preferred stock. In general, a net asset value approach to stock valuation, with discounts for minority interests and non marketability has seemed to be appropriate. While a willing buyer-willing seller approach to stock valuation has appeal in many situations, as a practical matter in most farm and ranch situations a willing buyer-willing seller value often would be derived from a net asset value with adjustments. Therefore, net asset value is used as a starting point in this discussion.

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