Ted died on May 3. At the time of his death, he owned a beach house valued at $250,000. On June 10, the beach house was completely destroyed by a hurricane and there was no insurance coverage. If the executor elects to use the alternate valuation date, the executor will

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If the executor elects to use the alternate valuation date, which is six months after the date of death, the value of the property included in the gross estate is the fair market value on that date. Since the beach house was destroyed before the alternate valuation date, the value is considered to be $0 and therefore it will be included in the gross estate at $0. There is no casualty loss deduction available for the estate tax return as the property was destroyed after the date of death. A casualty loss deduction may be available for the income tax return, but that depends on various factors such as the cost basis of the property and the amount of the loss.

Ted Died on May 3