Estate Basis Reporting Requirement

While we are dealing with other estate tax matters, estate executor or administrator should be aware of recent changes to the tax code that will affect their tax reporting responsibilities. If an executor is required to file an estate tax return, they must also file a separate form stating the value of certain items included in the decedent's estate. Each beneficiary who receives property from the decedent must receive information regarding the property he or she receives or could receive. This requirement applies to all estates if the required estate tax return is filed after July 31, 2015. Note that this requirement is not based on the decedent's date of death, but on the due date of the return, meaning that the requirement will apply to individuals who died before July 31, 2015.

In short, most executors who are required to file a federal estate tax return must file new Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent, along with a separate Schedule A for each beneficiary receiving property from the decedent and must state the value of the property as of the date of death (or alternate valuation date if elected). The relevant Schedule A must also be furnished to the beneficiary named in the schedule. Note that Form 8971 and Schedule A must include all property (with certain exceptions) included in the decedent's estate for estate tax purposes, even if that property is disposed of independently of the decedent's will and outside of the probate process (for example, property held in joint tenancy that passes to the surviving tenant automatically).

The due date for filing Form 8971 (and providing each beneficiary with their Schedule A) is the earlier of 30 days after the due date for the estate tax return (including any extensions granted) or 30 days after the estate tax return is actually filed. However, the IRS has extended the deadline to June 30, 2016, for any statement that would be due prior to that date.

Please feel free to contact Paul if you have questions about Form 8971. Paul's contact information can be found by clicking here.