Estate Planning

IRS Guidance for Executors of 2010 Estates

By Greg Herman-Giddens

Given the new basis reporting requirement for the estate of decedents dying in 2010, these new FAQ from the IRS are welcome and contain very important details, including (emphasis added):

Are there any filing requirements for a decedent who died in 2010?
Yes. Current legislation requires the executor of an estate to file the following tax returns: 

1. The final income tax return (Form 1040) for the decedent;
2. Fiduciary income tax returns (Form 1041) for the estate during administration; and
3. A return allocating the allowable basis adjustment to property acquired from a decedent, if the fair market value of the property exceeds $1.3 million or if the decedent acquired property by gift, except in certain cases.
4. No later than 30 days after the filing of the return allocating the allowable basis adjustment, a written statement to each recipient of property that contains the information on the return.

For more information, you should consult your tax adviser.

What is the due date for the tax return allocating the allowable basis adjustment?
The form allocating the allowable basis adjustment must be submitted by the executor with the decedent's final income tax return.  For decedents dying in 2010, the due date is Friday, April 15, 2011.

What if the assets acquired from the decedent have a fair market value of less than $1.3 million? Does the executor need to file a return allocating the basis adjustment?
Maybe. The return allocating the basis adjustment is required only if the property acquired from the decedent is in excess of $1.3 million or if the decedent acquired property by gift, except in the case of certain gifts from decedent's spouse, during the 3-year period ending on the date of the decedent's death and the donor was otherwise required to file a return to report the gift.

For more information, you should consult your tax adviser.

What is the form number for the return used to allocate the allowable basis adjustment and where can I obtain it?
A form to allocate the allowable basis adjustment due by the executor is currently under construction, and a number has not yet been assigned.

When the return form is completed, it will be posted at the IRS Web site.

Full post as published by North Carolina Estate Planning Blog on September 08, 2010 (boomark / email).