The IRS issued guidance (Notice 2016-19
) further postponing the new asset value reporting requirements for estates until March 31, 2016.
Legislation enacted last July imposed new reporting requirements on estates filing estate tax returns after July 31, 2015. These estates are required to report the value of assets for estate tax purposes on information returns that must be furnished to the IRS and beneficiaries within 30 days of filing Form 706. Beneficiaries must then use these values as the income tax basis for the inherited assets or face a penalty.
The IRS quickly issued Notice 2015-57 last year to postpone the reporting requirements until Feb. 29 so that it could create forms and guidance. Since then, the IRS released Form 8971, “Information Regarding Beneficiaries Acquiring Property from a Decedent”
and its instructions
, but acknowledged that further guidance is still needed. Notice 2016-19 postpones the filing deadline until March 31 and asks executors not to use Form 8971 until regulations are issued.
It’s important to note that the deadline relief doesn’t remove the reporting requirements; it merely defers reporting. Estates should still record and preserve asset values so that Form 8971 can be filed when regulations are issued and the transition relief expires.
The current Form 8971 instructions state that reporting is generally required only for estates that must file Form 706 because their assets exceed the lifetime estate and gift tax exemption, not for returns filed simply for portability or other elections. But reporting is also required of beneficiaries who are required to file Form 706 because the executor cannot file a complete estate tax return.
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.