IRS Delays Estate Basis Reporting Due Date

The Internal Revenue Service has issued a notice delaying the estate basis reporting due date from March 31 until June 30, 2016.

Notice 2016-27 provides that statements required under section 6035, regarding the basis of property distributed from the estate of a decedent, need not be filed or furnished until June 30, 2016, rather than the current March 31, 2016 deadline.

Earlier this month, the American Institute of CPAs wrote to the IRS requesting a delay (see AICPA urges Treasury and IRS to grant 60-Day extension of filing deadline for consistent basis reporting). In a March 4 letter, the AICPA said the 29 days between the release of proposed regulations and the March 31 due date did not provide enough time for taxpayers and tax practitioners to learn about recently proposed regulations on estate basis reporting and to review, analyze, and implement them during tax season. A 60-day extension to May 31 would give practitioners more time to analyze the changes after tax filing season.

On July 31, 2015, President Obama signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which added new sections 1014(f) and 6035 to the Tax Code.  Section 1014(f) requires that the basis of property acquired from a decedent, as determined under section 1014, cannot exceed the value of the property as finally determined for federal estate tax purposes, or if it’s not been finally determined, the value of the property as reported on a statement under section 6035.

Section 6035 imposes new reporting requirements with regard to the value of property included in a decedent’s gross estate for federal estate tax purposes identifying the value of each interest in the property as reported on the return. Last August, the Treasury Department and the IRS issued Notice 2015-57, which delayed until Feb. 29, 2016, the due date for any statements required under Section 6035(a)(3)(A). Last month, the IRS issued Notice 2016-19, to provide that executors and other persons required to file or furnish a statement need not do so until March 31, 2016.

On March 4, the Treasury Department and the IRS published temporary and proposed regulations under sections 1014(f) and 6035 in TD 9757. The new notice provides that executors and other persons required to file or furnish a statement under section 6035(a)(1) or (a)(2) before June 30, 2016, need not do so until June 30, 2016.

The Treasury Department and the IRS said they have received numerous comments that executors and other persons have not had sufficient time to adopt the systemic changes that would enable the filing of an accurate and complete Form 8971 and Schedule A. Accordingly, the statements required under sections 6035(a)(1) and (a)(2) to be filed with the IRS or furnished to a beneficiary before June 30, 2016, need not be filed with the IRS and furnished to a beneficiary until June 30 , 2016.

The notice is effective on March 23, 2016 and applies to executors of the estates of decedents and to other persons who are required under section 6018(a) or (b) to file a return if that return is filed after July 31, 2015.