The fair market value of a share in an open-end investment company (commonly known as a “mutual fund”) is the public redemption price of a share. In the absence of an affirmative showing of the public redemption price in effect at the time of death or gift, the last public redemption price quoted by the company for the date of death or gift shall be presumed to be the applicable public redemption price. If the estate tax alternate valuation method under IRC Section 2032 is elected, the last public redemption price quoted by the company for the alternate valuation date is the applicable redemption price. If there is no public redemption price quoted by the company for the applicable valuation date (e.g., the valuation date is a Saturday, Sunday, or holiday), the fair market value of the mutual fund share is the last public redemption price quoted by the company for the first day preceding the applicable valuation date for which there is a quotation.
In any case where a dividend is declared on a share in an open-end investment company before the decedent’s death but payable to shareholders of record on a date after his death and the share is quoted “ex-dividend” on the date of the decedent’s death, the amount of the dividend is added to the ex-dividend quotation in determining the fair market value of the share as of the date of the decedent’s death.
As used in this section, the term “open-end investment company” includes only a company that, on the applicable valuation date, was engaged in offering its shares to the public in the capacity of an open-end investment company.1 Participating agreement shares in mutual funds are valued at the liquidation value and not at the public offering price on the date of death (following Cartwright).2
1. Treas. Reg. §§ 20.2031-8(b); 25.2512-6(b); U.S. v. Cartwright, 411 U.S. 546 (1973).