Lucien dies in the current year owning a limited partnership interest in a partnership that owns and operates an apartment complex. Associated with Lucien's interest is a $10,000 suspended passive activity loss that he had not been able to claim. Ron, the executor of Lucien's estate, learns from the partnership's general partner that she is not aware of any recent qualified appraisals or sales that would help determine the fair market value of the limited partnership interest. Ron thinks that the cost of hiring a qualified appraiser to determine the value of the interest is not necessary because Lucien's estate is not large enough to be subject to the Federal estate tax. Lucien's records reflect a basis of $65,000 for the partnership interest immediately before his death.
The partnership's bookkeeper has a "gut feeling" that the partnership interest is worth anywhere between $65,000 and $80,000. This is good news to Ron. Based on her "guesstimate," Ron sets the value of the interest at $65,000.
What is Ron trying to accomplish in setting this valuation? What ethical issues arise?

  • CreatedMay 25, 2015
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