When he died in 2011, Nicolas Emery's estate included a small private lake that he and his family ran as a private resort where families enjoyed boating and fishing. Capitalization of the earnings of the present enterprise gives a value of $1,150,000 for the land. There was a $430,000 mortgage on the land. The boats, several utility vehicles, fishing equipment, portable concession stands, picnic tables, etc., are valued at $1,300,000. His home and other investments (not related to the business) were worth $2,800,000. Nicolas owed miscellaneous debts of $150,000 and estate expenses were $25,000. Developers would like to buy the property from the estate, put in a hotel and golf course at one end, and subdivide the rest as exclusive residential sites. The beneficiaries of his estate are §2032A qualified heirs and wish to continue the present business use.

a. What is the minimum fair market value that would have to be assigned to the real estate for Nicolas's estate to qualify for special use?

b. Suppose the FMV is determined to be $2,000,000; what would be the special use value, i.e., what value would be shown on the estate tax return? Use the inflation-adjusted §2032A amount.

c. Use the ETAX program to determine the estate tax savings.