How to use the special use valuation calculator
Korean estate tax offers a farming inheritance deduction that removes part of the farm estate from the tax base. The closest United States equivalent is the special use valuation election under 26 U.S.C. 2032A, which values qualifying farmland at what it is worth as a farm instead of what a developer would pay. This calculator runs the two percentage tests and the annual cap.
The 50% test compares total qualified farm property, real and personal, with the adjusted gross estate. The 25% test looks at farm real property alone. Both have to pass before any reduction is allowed, which is why the calculator reports each share separately.
The reduction is the difference between fair market value and special use value, limited to the maximum aggregate reduction the IRS indexes each year. That amount changes annually, so it is an editable field rather than a fixed number. Figures reflect the 2026 tax year.
The election also requires ownership and material participation in five of the eight years before death, and a qualified heir agreement. Because qualified use must continue for 10 years or the benefit is recaptured, this estimate is a starting point only. Work with an estate tax attorney or CPA before making the election.
Frequently Asked Questions
It lets qualifying farm or business real property be valued at its farm use value instead of its highest and best use, which lowers the taxable estate. The reduction is capped at an amount the IRS indexes every year.
Under 26 U.S.C. 2032A(c) the tax benefit is recaptured if the qualified use ends or the property is disposed of within 10 years of the date of death, with an additional estate tax reported on Form 706-A.
Yes. Farm property must be at least 50% of the adjusted gross estate and farm real property at least 25%, along with the material participation and ownership requirements. Failing either test means no reduction.