ALTERNATE VALUATION DATE
Back to GlossaryDefinition
An alternate date, other than the date of death, to value a decedent’s gross estate. The alternate valuation date is either six months after the date of death, or if the asset is disposed of within six months of the date of death, the asset’s disposition date. Wasting assets do not qualify to use the alternative valuation date.
Summary
The Alternate Valuation Date is a tax planning tool that allows estate executors to value a deceased person's assets either six months after death or on the date an asset is sold (if sold within six months), whichever comes first. This option is typically used when asset values have declined since the date of death, potentially reducing estate taxes. However, certain assets that naturally decrease in value over time (called 'wasting assets') cannot use this alternative timing method.
Usage Context
This term is crucial when studying estate tax planning strategies, estate administration procedures, and tax minimization techniques. Understanding alternate valuation is essential for estate tax return preparation and advising clients on post-death tax planning opportunities.
Common Confusions
- Thinking you can use alternate valuation for some assets but not others in the same estate
- Believing alternate valuation automatically applies when values decline
- Confusing wasting assets with depreciating assets
- Assuming alternate valuation always results in tax savings
- Thinking the election can be made after filing the estate tax return
