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) ]
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