What is the gross estate based on?

The gross estate is based on the fair market value of transferred gifts. This value represents what a willing buyer would pay to a willing seller for an asset at the time of the decedent's death, typically reflecting current market conditions. This assessment ensures that all assets included in the gross estate are valued accurately for tax purposes and allows for an appropriate calculation of estate taxes.

By using the fair market value, the estate captures the most accurate financial representation of the decedent's wealth at the time of death, which is crucial for establishing both the tax liability of the estate and the distribution of assets among heirs. Other methods of valuation, such as the cost of transferred gifts or the original purchase price, do not account for appreciation or depreciation in asset value, making them less appropriate for determining the gross estate's total value at the time of death. The current appraised value of the estate can vary significantly from actual fair market value and thus is not the primary basis for calculating the gross estate.