8:26-8.20 Discretionary and legal common trust funds

 8:26-8.20 Discretionary and legal common trust funds

   (a) Since the admission and withdrawal to the funds are controlled by contract, the value of the fund, therefore, is to be determined as of the close of business on the last bank business days of January, April, July and October of each year. For inheritance tax purposes the valuation date shall be:

1. Where approval was obtained by the donor in his lifetime, then the valuation date so approved, will control the value of his interest in the fund.

2. If the donor dies more than five days prior to a contractual valuation date without having applied for approval, it shall be deemed that such a request was in fact made; then the valuation date shall be the one next following his death.

3. If the donor dies five days or less prior to a valuation date, then the valuation date shall be the one next following the valuation date immediately after death.

4. If the donor dies one or more days subsequent to a valuation date, but more than five days prior to the next valuation date, the valuation date shall be the one following the date of death.

18:26-8.19 Patents, trade marks, copyrights, and other items

 18:26-8.19 Patents, trade marks, copyrights, and other items

   The valuation of a "Patent", "Trade Mark", "Copyright", "License", "Franchise", is a question of fact in each instance, the burden of proof being on the representative of the estate to show the history of the item being valued, the state of the art or the monopoly created as of the date of death. The bookkeeping entries or its original costs are not regarded as a reliable gauge of value. In most cases, the date of death value is primarily based upon the probable earnings such items will bring its owner.

18:26-8.18 Stocks, bonds, mutual funds and securities

18:26-8.18 Stocks, bonds, mutual funds and securities

   (a) The value of stocks, bonds and securities listed on any stock exchange is appraised on the basis of the intermediate price between the low and high price prevailing on the date of death.

1. If there were no sales of stocks, bonds, and securities listed on a stock exchange on the date of death, either the mean between the highest and lowest selling price for the previous day, or the nearest trading day prior to the date of death, or the prorated value used for Federal estate tax purposes reflecting the mean between the highest and lowest selling price on the nearest trading dates prior to and subsequent to the date of death may be used. The Alternative Valuation Date method of valuing stocks and bonds for Federal estate tax purposes is, however, not applicable for New Jersey transfer inheritance tax purposes. All of the assets must be valued using the same method;

2. Where stock on the date of death or thereafter is selling "ex dividend", the dividend is required to be added to the taxable estate in addition to the quoted value of the stock.

(b) The value of stocks and bonds which are sold infrequently or in unconsequential numbers may not be ascertainable by reference to the sales price on an exchange since the stock exchange value reflected by quotations is nothing more than evidence of true value under ordinary and normal conditions. Therefore, in cases where stocks or bonds are infrequently traded or sold in small quantities it is necessary to resort to financial statements along with any other pertinent data to determine the value at date of death.

(c) Shares of mutual funds are appraised at the bid price prevailing on the date of death, and in the event there is no bid price if the date of death falls on holiday or Saturday or Sunday, the values shall be those provided in subsection (a) of this Section.

(d) The market value of rare or unlisted securities is established by information furnished by brokers regularly dealing in such securities, officers of the corporations involved, or other documentary proof satisfactory to the Director.

18:26-8.17 Government bonds and securities

18:26-8.17 Government bonds and securities

   (a) Treasury bonds and similar negotiable obligations issued by the United States Government are valued at:

1. The intermediate price between the low and high price prevailing on the date of death of the decedent if traded on an exchange or over the counter;

2. If there were no sales of bonds or similar negotiable obligations issued by the United States Government on the date of death, either the mean between the highest and lowest selling price for the previous day, or the nearest trading day prior to the date of death, or the prorated value used for Federal estate tax purposes reflecting the mean between the highest and lowest selling price on the nearest trading dates prior to and subsequent to the date of death may be used. The Alternative Valuation Date method of valuing bonds for Federal estate tax purposes is, however, not acceptable for New Jersey transfer inheritance tax purposes. All of the assets must be valued using the same method;

3. Interest accrued from last interest date to date of death is required to be added to the taxable estate in addition to the quoted value of bonds or similar obligations; except,

(b) Interest accrued from the last interest date to the date of death is not included in the appraisal of the United States Savings Bonds Series "H".

(c) Further, Government Securities acceptable in payment of Federal estate taxes at par will be valued for New Jersey Transfer Inheritance Tax purposes at their market value as of the date of a decedent's death in accordance with paragraph 1 of subsection (a) of this Section.

 

18:26-8.16 Assets of close corporation or partnership of known market value

18:26-8.16 Assets of close corporation or partnership of known market value

   (a) When the assets of a "closely held" corporation or "partnership" include stocks and bonds which have a definite, established and known daily market value and are readily reducible to cash at that value, no deduction thereon will be allowed in determining the book value of the stock of the corporation or interest in the partnership.

(b) In ascertaining the book value of the common stock of a "closely held" corporation, the preferred stock, issued and outstanding, must be deducted at par value even though it might be selling or it is claimed that it shall be valued for less.

18:26-8.15 "Close" or "Family" corporation

18:26-8.15 "Close" or "Family" corporation

   (a) The appraisal of any stock of a decedent in a "closely held" or "family" corporation, incapable of being valued on the basis of bona fide sales, is based on the following data to be submitted with the return:

1. A detailed balance sheet and profit and loss statement, revised to reflect the market value of the assets thereof as distinguished from the net book value, as of the date of death of the decedent, or as near thereto as the Director may deem acceptable;

2. Detailed balance sheets establishing the net worth of the corporation for each of the five years preceding the date of death of the decedent;

3. Detailed profit and loss statements for the five years immediately preceding the date of the death of the decedent;

4. A statement establishing the salaries paid to each officer of the corporation for the five years immediately prior to death;

5. The nature of the business in which the corporation is engaged;

6. A copy, or copies, of any stock purchase or option agreement to which the decedent was a party at the time of his death; and

7. A copy, or copies of any insurance policies, if any, held by the corporation as beneficiary on the life of the decedent. The proceeds of such insurance are included as an asset of the corporation on the date of death in arriving at the value of the stock;

8. The number of shares of stock of all classes issued and outstanding and the par value thereof;

9. Statement of dividends paid, if any, for a five year period prior to decedent's death;

10. List of stockholders and number of shares owned by each;

11. If corporation owned realty description of same, assessed and market value thereof should be shown;

12. Basis for determining that clear market value is the value reported in the return.

18:26-8.14 Partnerships

18:26-8.14 Partnerships

   (a) In the case of a decedent who was a member of one or more partnerships the partnership interest of such decedent is given a value as of the date of death, based upon the following information which is to be submitted with the return:

1. A detailed balance sheet, revised to reflect the market value of the assets as distinguished from the net book value, as of the date of death of the decedent, or as near thereto as may be deemed acceptable;

2. Detailed balance sheets (setting forth the partner's capital accounts) and establishing the net worth of the partnership for each of the five years preceding the date of death of the decedent;

3. Detailed profit and loss statements for the five years immediately preceding the date of death of the decedent;

4. A copy of partnership agreement if any;

5. The nature of the business in which the partnership is engaged;

6. A copy, or copies, if any of a mutual purchase agreement to which the decedent was a party at the time of his death; and,

7. A copy, or copies, of any insurance policies, on the life of the decedent, held by the surviving partners as beneficiaries.

(b) In cases where the decedent was a member of a partnership that constitutes a family limited partnership, special rules apply, including rules related to valuation of the partnership interest.

1. A family limited partnership is a limited partnership in which more than 50 percent of the partners are related by blood or marriage/civil union and which does not have a true business purpose. It may or may not hold an interest in another partnership or other asset which has a true business purpose. One indicia of a true business purpose is that the family limited partnership has and engages in business or commercial transactions with customers, clients, persons or entities other than the partners of the family limited partnership, their family members or other related individuals or entities.

2. An interest in a family limited partnership is valued at the value of the underlying assets on the date of death of the decedent. Discounts for family limited partnership interests are not permitted unless the Director determines that they are warranted by the nature of and risk associated with the underlying assets.