Costly Tax Court Disasters: Why Reno Estates Are Failing Irs Qualified Appraisal Rules

Uncover key developments related to Costly Tax Court Disasters: Why Reno Estates Are Failing Irs Qualified Appraisal Rules in this special report.

Q1: Can an executor use a standard Washoe County real estate agent’s CMA for estate tax filing?

A1: No. A Comparative Market Analysis (CMA) or Broker Price Opinion (BPO) does not meet the legal requirements of an IRS qualified appraisal under Treasury Regulation § 1.170A-17. The Tax Court routinely rejects these informal assessments, leaving the estate exposed to back taxes, interest, and substantial penalties.

Q2: When does an appraisal need to be completed following an individual’s death?

A2: Form 706 is due nine months after the date of death, with an available six-month filing extension via Form 4768. However, the valuation itself must determine the fair market value as of the specific date of death, or the alternate valuation date six months later under IRC § 2032. Engaging an appraiser immediately prevents the loss of historical market comps and physical condition records.

Q3: What happens if the IRS rejects an appraisal after the estate assets have been distributed?

A3: If the IRS issues a notice of deficiency and penalties after distribution, the fiduciary can be held personally liable under federal priority statutes. The IRS can also place federal tax liens directly against the distributed real property or demand that beneficiaries return distributed funds to satisfy the tax debt.