ARTICLE: Consistent Basis Reporting Between Estates and Beneficiaries (November 2016)
Legislation enacted last year requires consistent reporting of basis between an estate and all beneficiaries receiving property from the estate. The IRS recently issued regulations on these complex rules, which this article analyzes.
UPDATE/PODCAST: IRS Released Revised Draft Instructions for Form 8971 (June 2016)
On June 8, the IRS issued updated draft instructions for Form 8971 with regard to estate basis consistency reporting. The instructions state to attach a copy of completed schedule A for the form but do not include any other attachments. Find out what this means for the June 30 filing deadline in this podcast by Bob Keebler, courtesy of Leimberg Information Services, Inc.
UPDATE: AICPA Comments Regarding the Consistent Estate Basis Reporting Issue (June 2016)
On June 1, the AICPA sent comments on the proposed regulations regarding the new section 1014(f) requirement for consistency between a recipient’s basis in property acquired form a decedent and the value of the property as reported for estate tax purposes and associated reporting requirements pursuant to new section 6035. Included in the comments were the following suggestions to the Treasury and IRS:
- Remove the “zero basis rule”
- Remove the Prop. Reg § 1.6035 -1(f)
- Include and address many other issues in the regulations
Click here to read the comments in full.
UPDATE: Form 8971 Due Date Delayed Until June 30, 2016 (March 2016)
Effective March 23, 2016, the Internal Revenue Service delayed the filing of Form 8971 until June 30, 2016 ( Notice 2016-27). Proposed and temporary regulations issued by the IRS in February govern the newly enacted provision that requires consistency between a recipient’s basis in certain property acquired from a decedent and the value of the property as finally determined for federal estate tax purposes ( REG-127923-15; T.D. 9757). The regulations provide rules regarding the consistent basis reporting requirement and the required statement that must be furnished to the IRS and beneficiaries on Form 8971 now due June 30.
ADVOCACY/UPDATE: IRS Proposes Estate Basis Consistency Rules with Form 8971 due March 31 (March 2016)
Proposed and temporary regulations issued by the IRS last week govern the newly enacted provision that requires consistency between a recipient’s basis in certain property acquired from a decedent and the value of the property as finally determined for federal estate tax purposes ( REG-127923-15; T.D. 9757). The regulations provide rules regarding the consistent basis reporting requirement and the required statement that must be furnished to the IRS and beneficiaries on Form 8971 due March 31. They exempt from the reporting requirement estates that file an estate tax return just to claim portability of a deceased spouse’s estate tax exemption. Read more in the Journal of Accountancy online.
AICPA submitted comments to Treasury and IRS, requesting a delay from March 31, 2016 to May 31, 2016 for the new estate basis reporting.
UPDATE: IRS Extends Due Dates for Estate Basis Reporting Until March 31 (February 2016)
The IRS on Thursday further delayed the due date for statements required under Sec. 6035(a)(3)(A) reporting the value of an estate’s assets from Feb. 29, 2016, to March 31, 2016 (Notice 2016-19). The extra time is designed to give taxpayers time to review proposed regulations, which the IRS anticipates issuing shortly, before they have to file Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent. Read more in the Journal of Accountancy online. Listen to Bob Keebler’s report (courtesy of Leimberg Information Services).
Webcast: What CPAs Need to Know About the Estate Tax Basis Reporting Rules
Recording | Presentation material
New IRS Form 8971 is required for any estate required to file a Form 706 after July 2015. The first sets are due March 31, 2016. The new form is part of an information reporting regime to maintain consistency between the values reported on an estate tax return and the basis reported by beneficiaries. On the surface, the new form seems manageable; however, providing beneficiaries the value (and basis) of assets they might receive turns out to be quite complicated. In this webcast, Bob Keebler and David Kirk will discuss the many issues preparers will need to work through in order to comply with the regulations (when available) and protect the estate, beneficiaries, and themselves.
- Learn about the IRS’s new reporting regime to ensure basis consistency between estates and beneficiaries;
- Learn the new accounting and legal issues practitioners must navigate to comply with the Code;
- Learn how to best complete the new IRS form 8971
- Introduction to Form 8971
- Understanding the Zero Basis Rule and Subsequent Filing Requirements
- Form 8971 and Addressing Basis in IRAs and Roth IRAs
- Basis Consistency Rules Under IRC Section 1014(f): Interview with Jonathan Blattmachr
- Due Date Delayed to March 30 and Next Steps to Take with Clients
- What You Need to Know About Filing Form 8971 for Basis Consistency: Interview with Vince Lackner (recorded prior to due date delay)
ToolsFlowcharts (PDF) - Use these Estate Basis Consistency flowcharts with the new IRS Form 8971 which is necessary for any estate required to file a Form 706 after July 2015. These online charts are interactive and must be run under Chrome, Firefox, or Safari only. Internet Explorer does not yet support the graphics that these charts require.
Copyright: Vince Lackner, The Lackner Group, Inc.