72-16-331. Definitions for alternate valuation purposes. As used in 72-16-331 through 72-16-349, the following definitions apply:
     (1) "Active management" means making management decisions of a business, other than the daily operating decisions.
     (2) "Adjusted value" means:
     (a) in the case of a gross estate, the gross value of all transfers subject to the tax imposed by this part, determined without regard to 72-16-331 through 72-16-349, reduced by the amount of unpaid mortgages and indebtedness;
     (b) in the case of real or personal property, the value of the property for the purposes of this part, determined without regard to 72-16-331 through 72-16-349, reduced by the amount of unpaid mortgages and indebtedness.
     (3) "Agreement" means a written agreement signed by each person in being who has an interest, whether or not the person is in possession, in any property designated in the agreement consenting to the application of 72-16-333 with respect to the property.
     (4) "Department" means the department of revenue.
     (5) "Disabled" means an individual who has a mental or physical impairment that renders the person unable to materially participate in the operation of a farm or other business.
     (6) "Eligible qualified heir" means a qualified heir who:
     (a) is the surviving spouse of the decedent;
     (b) has not attained 21 years of age;
     (c) is disabled; or
     (d) is a student.
     (7) "Farm" means truck farms, ranches, nurseries, ranges, greenhouses, orchards, woodlands, or structures used primarily for raising agricultural or horticultural commodities. The term includes stock, dairy animals, poultry, fur-bearing animals, and fruit.
     (8) "Farming purposes" means:
     (a) cultivating the soil or raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and managing of animals on a farm;
     (b) handling, drying, packing, grading, or storing on a farm any agricultural or horticultural commodity in its unmanufactured state, but only if the owner, tenant, or operator of the farm regularly produces more than one-half of the commodity so treated; or
     (c) (i) planting, cultivating, caring for, or cutting trees; or
     (ii) preparing, other than milling, trees for market.
     (9) "Internal Revenue Code" means the Internal Revenue Code of 1954. A reference to a specific section of that code is a reference to that section as it may be labeled or amended.
     (10) "Involuntary conversion" means a compulsory or involuntary conversion within the meaning of section 1033 of the Internal Revenue Code (26 U.S.C. 1033).
     (11) "Material participation" is determined in a manner similar to the manner used for the purposes of section 1402(a)(1) of the Internal Revenue Code (26 U.S.C. 1402(a)(1)).
     (12) (a) "Member of the family" means, with respect to any individual:
     (i) the individual's ancestor;
     (ii) the individual's spouse and the lineal descendants of the individual's spouse;
     (iii) the individual's lineal descendant;
     (iv) the lineal descendants of the individual's parents.
     (b) Member of the family also includes a spouse of:
     (i) the individual's lineal descendants;
     (ii) the lineal descendants of the individual's spouse; or
     (iii) the lineal descendants of the individual's parents.
     (c) For purposes of this subsection (12), a legally adopted child of an individual is treated as a child of the individual by blood.
     (13) "Net share rental" means the excess of:
     (a) the value of the produce received by a lessor of land on which the produce is grown;
     (b) divided by the cash operating expenses of growing such produce that, under the lease, are paid by the lessor.
     (14) "Qualified exchange property" means real property that is to be used for the qualified use set forth in subsection (18).
     (15) "Qualified heir" means, with respect to any property, a member of the decedent's family who acquired the property or to whom the property passed from the decedent. If a qualified heir disposes of any interest in qualified real property to any member of the qualified heir's family, the member must thereafter be treated as the qualified heir with respect to the interest.
     (16) "Qualified real property" means real property located in this state that was acquired from or passed from the decedent to a qualified heir of the decedent and that on the date of the decedent's death was being used for a qualified use by the decedent or a member of the decedent's family, but only if:
     (a) 50% or more of the adjusted value of the gross estate consists of the adjusted value of real or personal property that:
     (i) on the date of the decedent's death was being used for a qualified use by the decedent or a member of the decedent's family; and
     (ii) was acquired from or passed from the decedent to a qualified heir of the decedent;
     (b) 25% or more of the adjusted value of the gross estate consists of the adjusted value of real property that meets the requirements of subsections (16)(a)(ii) and (16)(c);
     (c) during the 8-year period ending on the date of the decedent's death there have been periods aggregating 5 years or more during which:
     (i) the real property was owned by the decedent or a member of the decedent's family and used for a qualified use by the decedent or a member of the decedent's family; and
     (ii) there was material participation by the decedent or a member of the decedent's family in the operation of the farm or other business;
     (d) the real property is designated in the agreement referred to in subsection (3); and
     (e) if an election is made with respect to qualified woodland, trees growing on the woodland may not be treated as a crop.
     (17) (a) "Qualified replacement property" means:
     (i) in the case of an involuntary conversion as described in section 1033(a)(1) of the Internal Revenue Code (26 U.S.C. 1033(a)(1)), any real property into which the real property is converted;
     (ii) in the case of an involuntary conversion as described in section 1033(a)(2) of the Internal Revenue Code (26 U.S.C. 1033(a)(2)), any real property purchased by the qualified heir during the period specified in section 1033(a)(2)(A) of the Internal Revenue Code (26 U.S.C. 1033(a)(2)(A)) for the purpose of replacing the qualified real property.
     (b) The term includes only property that is to be used for the qualified use set forth in subsection (18)(a) or (18)(b) of this section under which the qualified real property qualified under 72-16-333.
     (18) (a) "Qualified use" means devotion of the property to any of the following:
     (i) use as a farm for farming purposes; or
     (ii) use in a trade or business other than the trade or business of farming.
     (b) In the case of real property that meets the requirements of subsection (16)(c), residential buildings and related improvements on the real property occupied on a regular basis by the owner or lessee of the real property or by persons employed by the owner or lessee for the purpose of operating or maintaining the real property, and roads, buildings, and other structures and improvements functionally related to the qualified use must be treated as real property devoted to the qualified use.
     (19) "Qualified woodland" means any real property that:
     (a) is used in timber operations; and
     (b) is an identifiable area of land, such as an acre or other area, for which records are normally maintained in conducting timber operations.
     (20) "Student" means an individual as defined by section 151(e)(4) of the Internal Revenue Code (26 U.S.C. 151(e)(4)).
     (21) "Timber operations" means:
     (a) the planting, cultivating, caring for, or cutting of trees; or
     (b) the preparation, other than milling, of trees for market.

     History: En. Sec. 1, Ch. 705, L. 1979; amd. Sec. 185, Ch. 575, L. 1981; amd. Sec. 2, Ch. 511, L. 1983; amd. Sec. 260, Ch. 42, L. 1997.