United States

The IRS delays basis reporting for taxable estates


On July 31, 2015, President Obama signed legislation that provided funding for a three-month extension of the Highway Trust Fund. Included in this bill was the addition of section 1041(f) to the Internal Revenue Code. This new provision generally requires that the income tax basis of property acquired via inheritance may not be greater than the value of the property as reported on the decedent’s estate tax return.

To aid in the implementation of this new requirement—from both the perspective of the IRS and the recipient of the property—the act also imposed additional reporting requirements under the newly created section 6035. These new rules require executors of taxable estates to file additional information returns that provide information related to the value of inherited property, as reported on the estate tax return, to both the IRS and the recipient of the property.

This new provision requires that executors file such information returns within 30 days of the filing date of the estate tax return, and applied this requirement to all executors filing returns after the date of enactment. As the law was enacted on July 31, 2015, and the 30-day deadline is based upon the earlier of the date of filing or the extended due date, executors who filed estate tax returns on Aug. 1, 2015, are the first to be subject to this rule and would have been required to submit these new information returns on or before Sept. 2, 2015.

However, on Aug. 21, 2015, the IRS issued Notice 2015-57 delaying these requirements until Feb. 29, 2016. This delay is in recognition of the fact that no such information reporting forms currently exist and to allow the IRS time to provide guidance surrounding such reporting. This extended due date will apply to executors filing estate returns (or estates with required filing dates) between Aug. 1, 2015, and Jan. 30, 2016.


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