Question

• Explain the choices an executor of an estate has in determining the values of assets included in the estate for tax purposes.

Answer 1

Here is my Answer for the above question

An Executor is an individual responsible for managing the affairs of a deceased person's probate Estate.A decedent can no longer own property,so everything owned at the time of death must legally transfered to living beneficiaries.

Probate can lost for months or even years in some cases if an estate is extremely complicated.The executor is responsibe for managing the Estate throughout the entire process.

The executor is also responsible for having all the assets valued for Tax purposes.This determines weather any Estate Taxes are due. An Executor has Two options here;1. Date of Death values can be used 2. the Executor can elect to use an alternate valuation date six months later.

The Internal revenue code includes specific rules for using an alternate date and this option can only be used for assets that have not been sold or passed on to heirs with in those six months.If so, that property would be valued as of the date of distribution

Chances to value of Assets

1.Value at Death

Value at Death is used to calculate estate taxes, and to determine cost basis (depending on asset type) when an asset is eventually sold, either by the estate or by the heirs.

2.Value at Disposition

Value at Disposition is used to calculate estate income taxes if the asset was sold, or to calculate any state inheritance tax and appropriately allocate to heirs if the asset was distributed.

3. Gross verses Net value

Gross value is used when calculating taxes and in some states when calculating executor compensation; net value is also used when calculating taxes, in some states when calculating executor compensation, and when allocating distributions to heirs.

4.Assessing Value

certain types of Assets are easy to value,such as contents of bank Account or shares of stocks in a publicly traded companyother assets type can be little less definitive, such as used car, which you can estimate using public references, or real estate, where you want to make alook on Tax Assessor's valuation.

5.Real Value

Finally ,the real value of an Asset is what someone is willing to pay for it.