Frequently Asked Questions
Who is eligible for the Unlisted Stock Valuation Discount?
Applies to stock and securities of a corporation not listed on an exchange where no actual sales prices are available.
How does the Unlisted Stock Valuation Discount work?
Determines the value of non-publicly traded stock by comparing it to similar listed corporations, often allowing for lack of marketability or minority interest discounts.
What law authorizes the Unlisted Stock Valuation Discount?
The Unlisted Stock Valuation Discount is authorized under IRC §2031(b) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §2031
Source: Internal Revenue Code, Title 26, United States Code
§ 2031. Definition of gross estate(a) GeneralThe value of the gross estate of the decedent shall be determined by including to the extent provided for in this part, the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated.
(b) Valuation of unlisted stock and securitiesIn the case of stock and securities of a corporation the value of which, by reason of their not being listed on an exchange and by reason of the absence of sales thereof, cannot be determined with reference to bid and asked prices or with reference to sales prices, the value thereof shall be determined by taking into consideration, in addition to all other factors, the value of stock or securities of corporations engaged in the same or a similar line of business which are listed on an exchange.
(c) Estate tax with respect to land subject to a qualified conservation easement(1) In generalIf the executor makes the election described in paragraph (6), then, except as otherwise provided in this subsection, there shall be excluded from the gross estate the lesser of—(A) the applicable percentage of the value of land subject to a qualified conservation easement, reduced by the amount of any deduction under section 2055(f) with respect to such land, or
(B) $500,000.
(2) Applicable percentageFor purposes of paragraph (1), the term “applicable percentage” means 40 percent reduced (but not below zero) by 2 percentage points for each percentage point (or fraction thereof) by which the value of the qualified conservation easement is less than 30 percent of the value of the land (determined without regard to the value of such easement and reduced by the value of any retained development right (as defined in paragraph (5))). The values taken into account under the preceding sentence shall be such values as of the date of the contribution referred to in paragraph (8)(B).
[(3) Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(96), Dec. 19, 2014, 128 Stat. 4051]
(4) Treatment of certain indebtedness(A) In generalThe exclusion provided in paragraph (1) shall not apply to the extent that the land is debt-financed property.
(B) DefinitionsFor purposes of this paragraph—(i) Debt-financed propertyThe term “debt-financed property” means any property with respect to which there is an acquisition indebtedness (as defined in clause (ii)) on the date of the decedent’s death.
(ii) Acquisition indebtednessThe term “acquisition indebtedness” means, with respect to debt-financed property, the unpaid amount of—(I) the indebtedness incurred by the donor in acquiring such property,
(II) the indebtedness incurred before the acquisition of such property if such indebtedness would not have been incurred but for such acquisition,
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