IRS issued a couple of important pronouncements last week that could be of interest for executors of 2010 decedents’ estates.
Recall that 2001 legislation repealed the application of the federal estate tax to estates of people who died in 2010. On December 17, 2010, however, the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” (TRUIRJCA) was enacted, retroactively reinstating the estate tax. However, one of the provisions of TRUIRJCA allows the executor of the estate of a 2010 decedent to “opt out” of the estate tax, and thereby have the carryover basis rules apply, with certain potentially important modifications.
These executors will be required to file Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent. The Form will be due November 15, 2011, though the final version of the form has not yet been published by IRS! (for now, you can see the draft version here)
Rev Proc 2011-41 (issued August 5, 2011) provides the necessary guidance to executors regarding the “safe harbor” procedures of making the IRC Section 1022 election, and Notice 2011-66 (issued August 5, 2011) provides guidance regarding the time and manner of choosing to opt out of the estate tax and have the modified carryover basis rules apply.
It is important to note that Form 8939 is due November 15, 2011. IRS will not grant extensions of time to file a Form 8939, and will not accept an amended Form 8939 after the due date, with limited exceptions.