Estate valuation discounts for partial interest in realty.

Kiplinger Tax Letter, The, May, 1997

A half interest in realty in an estate gets a valuation discount. A father owned a 50% share of some lands. His kids owned the other half. When he died, his estate said the value of his 50% stake was less than 50% of the value of the properties...hard to sell partial interests in realty. It took a 25% discount. But IRS nixed any discount...then allowed 5% off.

The estate can claim a 20% discount for lack of marketability... the Tax Court allowed that. And now an Appeals Court awards attorney fees to estate...says IRS position wasn't justified (Est. of Cervin, 5th Cir.).

And valuation discounts can be claimed belatedly on prior gifts, IRS privately rules...can be used to recoup part of the $600,000 exemption that was used to avoid payment of a gift...

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