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New Federal Estate Tax Basis Reporting Requirements in Effect

Posted on: August 26th, 2015
estate tax basisEstates distributing property to beneficiaries on and after July 31, 2015 must follow new federal tax reporting requirements. (NOTE: The implementation of these rules have been delayed. Estate basis reports that would be due between July 31, 2015 and February 29, 2016 can delay filing to the latter time on February 29, 2016.) The rules generally require the basis reported by beneficiaries who inherit certain property from an estate to be consistent with the basis reported on the decedent’s estate tax return.

Executors required to file an estate tax return must furnish the IRS and estate beneficiaries with basis statements that reflect values of property interests just as they appear on the estate tax return. The new rules provide that basis statements are due within the earlier of 30 days after the estate tax return deadline (including extensions) or 30 days after the return was filed.  

Executors who fail to follow the new federal rules might subject the estate to penalties, and our estate planning attorneys provide an overview about executors being held personally liable for tax errors here. If the executor’s basis statement reflects values different than those included on the decedent’s estate tax return, penalty for underpayment might be imposed.

Proper valuation of a decedent’s assets is important when administering tax matters of an estate. Our North Carolina estate planning attorneys explain ways of determining date of death values here. Some estates involve collectibles, artifacts, or art – valuations of which an executor should manage carefully with the guidance of an estate planning attorney and qualified appraisers. 

Individuals serving as executor who are concerned about properly following the new federal reporting rules should seek the assistance of an estate planning lawyer in their state. Taxes are one of the most complicated areas to manage when administering an estate. A small administrative error on a form could cause large tax problems, even if the executor had completed calculations correctly.

Read the full text of the new tax rules at the following link. The changes are part of the Surface Transportation and Veterans Healthcare Choice Improvement Act of 2015

By Attorney Samantha Reichle
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