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IRS Regulations



The Internal Revenue Services, offers helpful information for people filing Form 706. Their toll-free phone number is (866) 699-4083, and their web site offers further help. We have selected the IRS regulations which are most frequently of interest to our clients.

Security Valuations

The mean price is calculated as the average of the high and low on the valuation date, when available. If these prices are not available (holiday, weekend or the issue did not trade), the mean price is the inversely weighted average of the high and low on the nearest trading dates before and after. If actual trades are not available, the nearest bid and ask prices are used.
[ IRS Reg. 20.2031-2 ]


For open ended investment companies (commonly known as mutual funds) the fair market price is the public redemption price on the valuation date. Should no price be available for that date, the price used will be the price for the first day preceding the valuation date.
[ IRS Reg. 20.2031-8(3)(b) ]

For alternative valuations, the above methodology holds true except for any issues where the price fluctuation is affected by a "mere lapse of time". Such issues are valued as of the date of death.
[ IRS Reg. 20.2032-1(3) ]

Dividend and Accrual Calculation

If an equity is ex-dividend for a cash distribution on or before the valuation date but is of record after the valuation date, the dividend is included in the report and is added to the security's mean value.
[ IRS Reg. 20.2031-2(i) ]

If an equity is ex-dividend and record for a cash distribution on or before the valuation date, but is payable after the valuation date, a separate dividend accrual entry is made.
[ IRS Reg. 20.2032-1(d) (4) ]

Interest is accrued for bonds from and including the last payable date up to and including the date of death.
[ IRS Reg. 20.2032-1(e) ]

Interest accruals are calculated on a 30/360 day basis for corporate, government agency and municipal bonds. An actual day basis is used for US Treasury Bonds and notes.
[ MSRB Rule G-33 ]

Series HH bonds are current-income bonds issued at par (face amount). Interest on Series HH bond is paid semiannually by check. In the case of a bond registered in the form "A payable on death to B", the check will be drawn to the order of "A" alone unless the Bureau of the Public Dept, Parkersburg, West Virginia 26101, receives notice of A's death. In that event, the payment of interest will be suspended until the bond is presented for payment or reissue. Interest so withheld will be paid to the person entitled to the bond.
[ IRS Reg. 353.31(iii) ]