New Basis Reporting Requirements for Executors and Others Who File Estate Tax Returns
Authors: Jill S. Dodd | Claire F. Hofbauer
Statutes imposing new reporting requirements on executors and others who file estate tax returns were tacked onto a transportation and veteran's healthcare bill passed by Congress and signed into law last July. The new requirements apply to all who are required to file an estate tax return with the IRS on or after July 31, 2015. Executors who are not required to file an estate tax return, or who do so only for the purpose of making an allocation or election respecting the generation-skipping transfer tax, are not subject to these new reporting requirements under the Act.
Pursuant to the Act, the IRS is finalizing Form 8971, "Information Regarding Beneficiaries Acquiring Property from a Decedent." A draft version of the form can be found on the IRS website here. Draft instructions are available on the Office of Information and Regulatory Affairs website here.
The form itself consists of two parts: (1) Form 8971 and (2) Schedule A. Part 1 is a one-page form on which the executor lists the names, addresses, and taxpayer identification numbers for each individual, trust, and other estate who will acquire property from a decedent's estate.
Part 2, Schedule A, is a form that the executor must prepare separately for each beneficiary listed in Part 1. Each beneficiary's Schedule A will contain only information about that beneficiary's property, including a description of the property and the value at which such property was reported to the IRS on the decedent's estate tax return. The executor is instructed not to provide beneficiaries with a copy of the Form 8971 or with copies of any other beneficiary's Schedule A.
Generally, Form 8971 and all Schedule A's must be filed with the IRS, and each Schedule A must be served upon its beneficiary no later than 30 days after the earlier of the deadline for filing the estate tax return (including extensions) or the actual filing date. However, due to current unavailability of a final version Form 8971, the earliest due date for filing this form is February 29, 2016.