The Internal Revenue Service has issued guidance to help taxpayers cope with the carryover basis rules for the estates of people who died last year, when the estate tax was not in effect.
The guidance is intended to help executors who are making the choice to opt out of the estate tax and have the carryover basis rules apply.
Under the guidance issued Friday, an executor must file Form 8939, “Allocation of Increase in Basis for Property Acquired from a Decedent,” in order to opt out of the estate tax and have the new carryover basis rules apply. The IRS expects to issue Form 8939 and the related instructions early this fall.
The estate tax expired for persons who died in 2010, under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001. However, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reinstated the estate tax for persons who died in 2010. The law, which passed last December and largely extended the Bush era tax rates for another two years, allows executors of the estates of decedents who died in 2010 to opt out of the estate tax, and instead elect to be governed by the repealed carry-over basis provisions of the 2001 Act. The choice is to be made by filing Form 8939.
The IRS also issued
