Misleading Rulings Holding No Recapture on Possible Cash Rent Lease After Special Use Valuation Election

Abstract

<p>For those who elect special use valuation for farmland at death for federal estate tax purposes,<strong>1 </strong>one of the major concerns is the possibility of recapture in the after-death period.<strong>2</strong> Four almost identical letter rulings, issued in 2011, have provided further guidance on the relevant authority governing post-death recapture.<strong>3 </strong>Unfortunately, the rulings cite approvingly to two Court of Appeals decisions,<strong>4 </strong>both of which have been roundly criticized as improperly approving post-death cash rent leasing at the time of those cases.<strong>5 </strong>To complicate matters further, an amendment in 1997, retroactive to December 31, 1976, expanded the opportunity to receive cash rentals on special use valued land after death.<strong>6 </strong>That aspect is not mentioned in the 2011 rulings.<strong>7</strong></p>