October 13, 2019

October 11, 2019

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New Rules for Basis Consistency

If you are an executor of an estate or an advisor to such executor, then you need to be aware of two new statutes that may impact you and a change in the initial deadline. Included in the Surface Transportation and Veterans Health Care Choice Improvement Act that was effective on July 31, 2015, were two statutes that require the executor of an estate to report to the IRS and to the beneficiaries of the estate the basis (in this case, fair market value of the asset that is determined after a death) of the assets that the beneficiaries are to receive from the estate.

Section 1014(f) requires that the basis the beneficiary receives be consistent with the value as reported on the estate tax return. Section 6035 is the reporting requirement on new Form 8971. Under Section 6035, executors are required to provide certain information on Form 8971 to beneficiaries no later than the earlier of (a) 30 days after the estate tax return was due (taking into account any extensions), or (b) 30 days after the estate tax return is filed. InNotice 2015-57, effective on August 21, 2015, the initial deadline for such reporting was extended to February 29, 2016 to allow for the promulgation of regulations.

On February 11, 2016, Notice 2016-19 was released in which the initial deadline was further extended to March 31, 2016 to allow for more time to issue regulations relating to these new statutes. Among other items that are in need of clarification is whether an executor of an estate in which an estate tax return is only being filed to take advantage of portability needs to complete and file Form 8971. The recent Notice advises executors and others to not file Form 8971 until the release of the regulations, which are expected “very shortly.” Thus, executors and advisors remain in limbo in certain situations and will need to stay tuned for further updates.  Furthermore, beneficiaries need to be aware that they will be receiving this information and will be responsible for maintaining accurate records.

© 2019 Odin, Feldman & Pittleman, P.C.

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About this Author

Catherine F. Schott Murray, Estate Attorney, Odin Feldman
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Catherine F. Schott Murray appreciates that every client’s situation is unique and requires solutions that are adapted to their particular needs, goals, and objectives. She takes the time to carefully listen to her clients and discuss decisions that are not always straightforward, ultimately reaching an appropriate resolution that is pertinent to each client. Catherine is professional, yet compassionate, while carefully explaining complex matters during potentially trying times. She is an active member of the National Academy of Elder Law Attorneys (NAELA) and serves on the Board of...

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