Estate Basis Reporting Requirements

Congress has recently enacted the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 which addresses the basis reporting requirements associated with estates. Specifically, the Act now requires an executor to report consistent reporting of basis information between an estate and anyone inheriting the property from the decedent. Further, the Act created a new Internal Revenue Code Section 6035 which now imposes a reporting requirement by the executor to furnish a statement to the IRS and to each beneficiary inheriting an interest in the decedent’s estate.

The statement must identify the value of each property reported on the estate return and any other information the IRS may require which is not clearly defined by the IRS at this time. This reporting requirement is effective July 31, 2015 and requires the executor to provide this information within 30 days of the estate tax return’s due date or 30 days after the estate tax return is filed, whichever is earlier.

On August 21, 2015, the IRS issued Notice 2015-57, announcing that the due date has been extended to February 29, 2016. Treasury and the IRS expect to issue additional guidance and forms to assist taxpayers with complying with this requirement.

In the event the basis information reported between the estate return and the beneficiaries’ returns is inconsistent, an accuracy-related penalty maybe imposed. Also, if adjustments need to be made to the statement furnished to the IRS, a supplemental statement must be filed within 30 days of the adjustment. In the event this is not adhered to, the IRS may impose further penalties.

If you have further questions related to this new law, contact you Marcum Trust and Estate Tax Professional.