Skip Page Banner  
About This Blog

The Bloomberg BNA Estate Tax Blog is a forum for practitioners and Bloomberg BNA editors to share ideas, raise issues, and network with colleagues. The ideas presented here are those of individuals and Bloomberg BNA bears no responsibility for the appropriateness or accuracy of the communications between group members.

Blogroll
ESTATE TAX
BLOG

Thursday, September 29, 2011

Well Worth the Wait: Guidance for Estates of Persons Who Died in 2010

RSS

Recently, the IRS issued long-anticipated guidance of interest to those administering estates of persons who died in 2010. Executors who wish to elect application of the §1022 carryover basis regime, rather than the estate tax, received an extension of time and a safe harbor in making that election. Further, the IRS provided procedures that, if followed, will not only result in an extension of time to file the appropriate estate tax return but also will allow the estate to delay payment of applicable estate tax without facing late filing fees and late payments penalties.

In Notice 2011-66, 2011-35 I.R.B. 184, the IRS provided guidance regarding the time and manner in which an executor of the estate of a decedent who died in 2010 elects to have the §1022 carryover basis rules, rather than the estate tax, apply to property transferred as a result of the decedent's death. In Rev. Proc. 2011-41, 2011-35 I.R.B. 188, the IRS provided a safe harbor for an executor making the election to apply §1022 to the estate of a decedent dying in 2010. If the electing executor follows the applicable provisions of Rev. Proc. 2011-41, §4, and takes no return position contrary to any provisions of §4, the IRS will not challenge the taxpayer's ability to rely on the §4 provisions either on the Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, or any other tax return. Notice 2011-76, 2011-40 I.R.B. __ (10/3/11), changed the due date to file Form 8939, on which the estate elects to apply §1022, from Nov. 15, 2011, to Jan. 17, 2012. The IRS will grant no further extension of time to file Form 8939. See also, IRS News Release IR-2011-91 (9/13/11).

Generally, IRS Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, must be filed on or before the due date for the estate tax return to obtain an extension of time to file the appropriate estate return. Though a six-month filing extension is automatically granted to estates filing this form, an extension of time to pay generally is granted only for good cause. However, Notice 2011-76, 2011-40 I.R.B. __ (10/3/11), provides that the IRS will not impose late filing fees and late payment penalties under §6651(a)(1), (2) on estates of decedents who die after Dec. 31, 2009, and before Dec. 17, 2010, if the estate timely files Form 4768, and then files Form 706, United State Estate (and Generation-Skipping Transfer) Tax Return, or Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return, Estate of Nonresident not a Citizen of the United States, and pays the estate tax by Mar. 19, 2012. Form 4768 is timely filed if filed by the due date for filing Form 706 or Form 706-NA. Further, the IRS will not impose such fees and penalties on estates of decedents who die after Dec. 16, 2010, and before Jan. 1, 2011, if the estate timely files Form 4768, then files Form 706 or Form 706-NA, and pays the estate tax within 15 months after the decedent's date of death. Note that, under both scenarios, interest still will be charged on any estate tax paid after the return's original due date. Notice 2011-76; IRS New Release IR-2011-91 (9/13/11).

Though a long time in coming, if we move with alacrity we still can reap these benefits in administering the estates of persons who died in 2010.
Subscription RequiredAll BNA publications are subscription-based and require an account. If you are a subscriber to the BNA publication and signed-in, you will automatically have access to the story. If you are not a subscriber, you will need to sign-up for a trial subscription.

You must Sign In or Register to post a comment.

Comments (0)