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Subject:  Co-op share valuation for estate tax Date:  7/9/2013  9:39 AM
Author:  irasmilo Number:  118816 of 127549

I'm working on an Estate and ran across a situation that I'd love an opinion on.

Decedent is second to die and owns shares in a co-op (prumary residence). I know that the best method for valuation is either a certified appraisal as of the date of death or an actual sale of the shares shortly after the date of death. Here are the facts that I have.

Co-op shares were appraised at $X in 2005 when first spouse died. The co-op shares were sold approximately 8 months after death for ~1/2 $X. Even sithout a DoD appraisal, I know that the value of the co=op unit didn't change much since DoD.

But I had this offbeat idea today. Although the co-op is treated like real estate in many ways, it is actually shares in a corporation. I could determine a valuation by looking at the sales just before and after the Dod and interpolating a price/share on the DoD. The issue is one of fungibility. Technically, the shares you own in a co-op give you the right to occupy a specific unit, but otherwise are indistinguishable from any other shares.

This might work to the Estate's advantage because the unit in question hadn't been renovated and needed some work. We're only looking at NJ Estate Tax (Estate value is below the federal threshold) and I expect the interpolated valuation will be higher than either a DoD appraisal or the actual sales price. The capital loss on the sale using the higher valuation may be worth more to the beneficiary than the additional NJ Estate Tax.

Any thoughts from those with more experience?

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