Alternative date.

The Tax Court has held that an executor's election to use the Sec. 2032(a) alternate valuation date must occur within one year of the due date (including extensions) of the Federal estate tax return. In Est. of Edward H. Eddy, 115 TC No. 10, the court made clear that an election to use the alternate valuation date, on an estate tax return filed more than 18 months after the filing deadline, was invalid. Thus, the estate was forced to use date-of-death (DOD) valuation.

The decedent died in April 1993; the executor hired a major securities firm to value the estate's 237,352 shares of Browning-Ferris Industries, Inc. The estate tax return was due in January 1994, but the executor obtained an extension to file until July 13,1994, and submitted $2 million with the extension application. The return was filed in January 1996; the executor used alternate valuation. The IRS determined that the estate had to use DOD value; the Tax Court agreed.

According to the court, use of Sec. 2032(a) is permitted only if the estate tax return is filed no later than one year (including extensions) after the due date. Because (in this case) the return was filed more than 18 months after the extended due date, alternate valuation was not available; the estate had to use DOD valuation.