IRS Instructions for Estate Basis Reporting Sent for Review

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Jan. 5 — Anxiously awaited instructions to IRS Form 8971 for reporting the basis of estates have now been submitted to the Office of Management and Budget for review.

Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent, tells estate executors and others required to file a Form 706 how to report the final estate tax value of a property to the Internal Revenue Service and beneficiaries receiving the property from the estate.

Form 706 is the United States Estate (and Generation-Skipping Transfer) Tax Return.

The instructions appear on the Office of Information and Regulatory Affairs website.

The instructions aren't yet the final draft, the IRS said Jan. 5, but have been submitted to the OMB via the Treasury Department to secure approval under the Paperwork Reduction Act to issue the new form. By law such submissions must be made available to the public.

The IRS will eventually issue draft instructions, which will appear on the IRS website for draft forms, it said.

The draft Form 8971 was posted on the IRS Forms & Publications website on Dec. 18.

Thirty-Day Time Frames

Consistency in basis reporting between estates and beneficiaries was driven by the Surface Transportation and Veterans Health Care Choice Improvement Act (Pub. L. No. 114-41), which was enacted July 31.

Form 8971, including all attached Schedule As, must be provided to the beneficiary listed on Schedule A no later than the earlier of:

  • 30 days after the date one of the Series 706 forms is required to be filed (including extensions if there are any) with the IRS; or
  • 30 days after the date Form 706, or one of the others of that series, is filed with the IRS.

    The instructions note that under Notice 2015-57, the due dates of all Forms 8971, including attached Schedules A that are required to be filed with the IRS and provided to beneficiaries after July 31, 2015, and before Feb. 29, 2016, are delayed until Feb. 29, 2016 (163 DTR G-3, 8/24/15).

    To contact the reporter on this story: Diane Freda in Washington at dfreda@bna.com
    To contact the editor responsible for this story: Brett Ferguson at bferguson@bna.com