Does taxpayer need a new appraisal?

[tpnl]

Appraisal of mineral rights completed in December 2016. Taxpayer dies March 2018. Family is inheriting mineral rights. Family is balking about getting a new appraisal of the mineral rights since one was done, in their opinion, "recently."

I think they need a new one to establish their stepped up basis. I found an article that said the IRS uses 6 months as a rule. However, I could not find anything on the IRS website stating so.

Any thoughts?

[ATSMAN]

Appraisal of mineral rights completed in December 2016. Taxpayer dies March 2018. Family is inheriting mineral rights. Family is balking about getting a new appraisal of the mineral rights since one was done, in their opinion, "recently."

I think they need a new one to establish their stepped up basis. I found an article that said the IRS uses 6 months as a rule. However, I could not find anything on the IRS website stating so.

Any thoughts?

I would tell the family "Don't be cheap!". IRS may disqualify any stepped up basis because there may have been depletion since the last valuation and this is not trying to figure out the valuation of a piece of land from land tax records!

[TAXNJ]

Does the "article" have an author you can contact for reference to the "6 month rule" you state? Also, what is the article and who is the publisher?

[Burke]

I think he was referring to the alternative 6 mos valuation for estate taxes.

[JohnH]

I assume there's quite a bit of tax at stake. I'd give them an estimate of the potential consequences of IRS rejecting their FMV and then let them decide on whether they need to take the risk. You need to be sure they've been advised of the potential consequences. After that, it's their call whether to be penny wise and pound foolish.

[TAXNJ]

I though he was referring to the alternative 6 mos valuation for estate taxes.

If so, then Original Poster can reference TTB starting at tab 21-24:

"Special use valuation. An executor may elect to value real property used in a family farm or business at its current use rather than at its highest and best use. The real property must be at least 25% of the adjusted gross estate. Real and personal property used in the farm or business must be at least 50%. Participation rules apply both before and after death. (IRC §2032A)
See IRC section 2032A for details and additional requirements.
Alternate valuation. An executor may elect to value all property included in the estate on the alternate valuation date described, below, instead of on the date of death. (IRC §2032)
• Any property not disposed of within six months is valued on the date six months after death."......