26 U.S.C. § 2031 — Definition of gross estate

(a) General rule. To the extent this part provides, the decedent’s gross estate includes the value at the time of death of all real and personal property, whether tangible or intangible and wherever located.

(b) Unlisted stock^* and securities. If stock or securities cannot be valued from bid and asked prices or sales prices because they are not listed on an exchange and have not been sold, their value must be determined by considering all relevant factors, including the value of stock or securities of listed corporations in the same or a similar line of business.

(c) Estate tax for land under a qualified conservation easement. (1) General rule. If the executor makes the election in paragraph (6), the gross estate excludes, except as this subsection provides, the smaller of: (A) the applicable percentage of the value of the land subject to the easement, minus any deduction under section 2055(f) for that land; or (B) $500,000. (2) Applicable percentage. “Applicable percentage” means 40 percent, reduced—but not below zero—by 2 percentage points for each percentage point, or fraction of a percentage point, by which the easement’s value is less than 30 percent of the land’s value. The land’s value is determined without counting the easement and is reduced by the value of any retained development right defined in paragraph (5). These values are measured on the date of the contribution described in paragraph (8)(B). (3) Repealed by Pub. L. 113–295, division A, title II, section 221(a)(96), December 19, 2014, 128 Stat. 4051.

(4) Certain debt. (A) The paragraph (1) exclusion does not apply to the extent the land is “debt-financed property.” (B) For this paragraph: (i) “Debt-financed property” means property with “acquisition indebtedness” on the date of death. (ii) “Acquisition indebtedness” means the unpaid amount of: (I) debt the donor incurred to acquire the property; (II) debt incurred before acquisition that would not have been incurred without the acquisition; (III) debt incurred after acquisition that would not have been incurred without the acquisition and whose incurrence was reasonably foreseeable when the property was acquired; and (IV) an extension, renewal, or refinancing of acquisition indebtedness. This section does not otherwise define the quoted terms.

(5) Retained development rights. (A) The paragraph (1) exclusion does not apply to the value of a development right the donor retained when conveying the easement. (B) If every living person with any interest in the land, whether or not currently entitled to possess it, signs an agreement permanently extinguishing some or all retained development rights defined in subparagraph (D) by the estate-tax return filing date, the tax under section 2001 must be reduced accordingly. The agreement must be filed with that return and must use the Secretary’s required form. (C) If the agreement is not carried out by the earlier of (i) two years after the decedent’s death or (ii) the sale date of the land subject to the easement, an additional tax is imposed equal to the tax that would have been due on the retained rights covered by the agreement. The additional tax is due on the last day of the sixth month after that date. (D) “Development right” means a right to use the land subject to the easement for a commercial purpose that is not subordinate to and directly supportive of using the land as a farm for farming purposes, within the meaning of section 2032A(e)(5). This section does not otherwise define the quoted term.

(6) Election. The election must be made on or before the due date, including extensions, for filing the section 2001 estate-tax return, and it must be made on that return. Once made, it cannot be revoked. (7) Computing estate tax. An executor making the election must include, when calculating section 2001 tax, the value of each retained development right defined in paragraph (5). The Secretary^* prescribes how to compute that tax and the forms to use. (8) Definitions. For this subsection: (A) “Land subject to a qualified conservation easement” means land (i) in the United States or a United States possession; (ii) owned by the decedent or a family member at all times during the three years ending at death; and (iii) covered, by the election date, by a qualified conservation easement made by an individual described in subparagraph (C). (B) “Qualified conservation easement” means a qualified conservation contribution under section 170(h)(1) of a qualified real-property interest under section 170(h)(2)(C), except that section 170(h)(4)(A)(iv) does not apply and the use restriction in section 170(h)(2)(C) must prohibit more than a minimal use for commercial recreation. (C) An “individual described” is (i) the decedent; (ii) a family member; (iii) the estate executor; or (iv) the trustee of a trust whose assets include the land to be covered. (D) “Member of the decedent’s family” means a member of the decedent’s family as defined in section 2032A(e)(2). This section does not otherwise define the quoted terms. (9) Easements granted after death. If the easement is granted after death but by the estate-tax return due date, including extensions, the estate may take the section 2055(f) deduction only if no person receives a charitable deduction under chapter 1 for granting that easement. (10) Entities. This section applies to an interest in a partnership^*, corporation^*, or trust if the decedent directly or indirectly owned at least 30 percent of the entity, measured under the rules in section 2057(e)(3) as that provision existed before repeal.

(d) Cross-reference. For the executor’s right, on request, to receive a statement about a valuation the Secretary made within the gross estate, see section 7517.