Whew.
It has taken awhile but the IRS has finally issued guidance for the treatment of basis for certain estates of decedents who died in 2010. As you’ve probably heard, there was no federal estate tax due for decedents who died in 2010. Well, er, sort of…
Under the Economic Growth and Tax Relief Reconciliation Act of 2001, the federal estate tax was repealed for 2010, implementing a set of confusing carry over basis rules instead. The federal estate tax was slated to come back in 2011 under the old rules. However, the last minute tax deal under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reinstated the federal estate tax for persons who died in 2010. You didn’t know that, right? Yeah, there’s a reason it didn’t get a lot of press.
The legislation was worded such that estates which would have been subject to the federal estate tax have to proactively opt out. Under the law, executors of the estates of decedents who died in 2010 may now opt out of the federal estate tax and instead elect to be governed by the repealed carry-over basis provisions of the 2001 Act. To do this, those executors must file a federal form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent.
However, the federal form 8939 still remains elusive. As in no mere mortals outside of the IRS have seen one yet. The IRS expects to release the form in the fall. If you’re dying to get a peek, you can see a draft copy here (downloads as a pdf).
And, after the IRS previously announced that federal form 8939 was not due on April 18, 2011, we now know that it is due on November 15, 2011 – assuming we have the form by then.
For more guidance and details on the election, you can read Notice 2011-66 (downloads as a pdf).
