IRS postpones new requirements for estates to report asset values

The IRS postponed the new asset value reporting requirements for estates until Feb. 29, 2016.

The recently enacted highway bill imposes new reporting requirements for estates filing estate tax returns after July 31, 2015. These estates must report the value of assets for estate tax purposes on information returns, and those returns must be furnished to the IRS and beneficiaries within 30 days of filing Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return.” Beneficiaries must then use these values as the income tax basis for the inherited assets or face a penalty.

The reporting deadlines under the statute would have come as early as Aug. 31 for estate tax returns filed on Aug. 1. But the IRS acknowledged it has no reporting procedures in place, and Notice 2015-57 postpones the due date for any new reporting until Feb. 29, 2016. The guidance doesn’t remove the reporting requirement; it merely defers reporting. Estates should still record and preserve asset values so that the reporting can be performed when the IRS releases reporting procedures and the transition relief expires.

The reporting is required of estates that must file Form 706 because their assets exceed the lifetime estate and gift tax exemption ($5.43 million in assets for 2015 decedents). Reporting is also required of beneficiaries who are required to file Form 706 because the executor is unable to file a complete estate tax return. However, the new law authorizes the IRS to issue regulations that could require reporting even when an estate tax return isn’t required. The IRS pledged to release further guidance soon.

David Walser
+1 602 474 3410

Dustin Stamper
+1 202 861 4144

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