880 / How is property valued for purposes of the GST tax?

For purposes of determining the GST inclusion ratio, certain other valuation rules may apply in some instances. For purposes of determining the denominator of the applicable fraction (see above), the value of property transferred during life is its fair market value as of the effective date of the GST exemption allocation (see Q 879). However, with respect to late allocations of the GST exemption to a trust, the transferor may elect (solely for purpose of determining the fair market value of trust assets) to treat the allocation as made on the first day of the month in which the allocation is made. This election is not effective with respect to a life insurance policy, or a trust holding a life insurance policy, if the insured individual has died. For purposes of determining the denominator of the applicable fraction, the value of property included in the decedent’s gross estate is its value for estate tax purposes. However, special use valuation (see Q 760) is not available unless the recapture agreement under IRC Section 2032A specifically refers to the GST tax. There are special rules in the regulations concerning the allocation of post-death appreciation or depreciation with respect to pecuniary payments and residuary payments made after a pecuniary payment.²