The IRS has announced that federal form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent, is not due on April 18, 2011 and should not be filed with the final federal form 1040 of persons who died in 2010.
Of course, if you’ve tried to file a federal form 8939, you probably already knew that. It looks like this (downloads as a pdf) which is basically a form with the word “Draft” stamped all over it. The most recent draft is dated 12/16/2010 – just one day before President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The Act brought back the federal estate tax in a completely confusing manner. If an estate opts out of the federal estate tax for decedents who died in 2010, the step-up in basis in assets for income tax purposes is limited. The federal form 8939 is an informational return used to establish basis in that event. The form was supposed to be due on the date of the decedent’s final federal form 1040 or a later date specified in regulations issued by the Treasury Department.
There’s been no guidance, however, for federal form 8939 (I’m guessing they’re still trying to figure out how this whole mess will work). The IRS promises there will eventually be some and that there will be a “reasonable period of time for preparation and filing” of the form.
Once again, very useful information. Will be looking for the follow up. Thanks for that.