IRA valuation.

• Author: Laffie, Lesli S.
• Position: From the IRS

According to Letter Ruling (TAM) 200247001, an estate cannot discount the value of a decedent's IRAs for income taxes payable by beneficiaries or for lack of marketability.

B died owning several IRAs funded with marketable securities and money market accounts. His estate was the beneficiary. His executor hired an appraisal firm that valued his IRAs at less than the date-of-death (DOD) value of the securities and money market funds. The discount reflected potential income tax payable by estate beneficiaries on IRA distributions, and a lack of marketability due to possible delays in payment of distributions and limits on the transfer or assignment of the accounts before distribution.

The IRS concluded in the TAM that the IRAs' estate tax value cannot be discounted in this manner. It ruled that the Sec. 691(c) income tax...