112.11 Modifications relating to property acquired from the estate of a decedent.

(a) General. A modification may be required under section 612(b)(17) or 612(c)(19) of the Tax Law (see section 112.2[n] or 112.3[o] of this Part) when property acquired from a decedent and valued by the executor of the estate is either sold or disposed of and a gain or loss is realized.

(b) Where a Federal estate tax return is not required to be filed, the Federal gain or loss, based on the value of the property sold or disposed of as of the date of the decedent's death, will be reflected in Federal adjusted gross income. Where such property was valued under the alternate valuation method for New York State purposes, the New York State gain or loss realized will be based on the value of the property as of the alternate valuation date or dates. This may result in a different gain or loss for Federal and New York State tax purposes and such difference becomes the modification required under section 612(b)(17) or 612(c)(19) of the Tax Law (see section 112.2[n] or 112.3[o] of this Part).