The American Institute of CPAs is criticizing proposed regulations for how post-death events might be considered in determining the value of a taxable estate.
The regulations would affect estates of decedents against whom there are claims outstanding at the time of their deaths. The Treasury Department and the Internal Revenue Service have proposed amending existing regulations to prohibit using the date-of-death value as the amount of the deduction for a claim against the estate or debt of a decedent if there are any existing contingencies.
The AICPA contends that the approach would create a series of traps for unwary executors and tax preparers. The institute argues the proposed regulations would lead to a situation in which an estate could be held open for years to determine the amount of the deduction for a contingent obligation.
The AICPA said heirs and executors could incur additional costs and burdens, including the possibility of filing annual refund claims every year for 25 or more years under certain circumstances. The institute pointed out that some of the proposals echo recent IRS litigation positions that have not succeeded in court.
The AICPA also gave its opinion to the IRS on the question of how to determine which parent in a separated or divorced family has custody of a child and can claim the child as a dependent. The AICPA wrote that it agreed with the IRS on the idea of counting nights spent with the parent as an appropriate measure. However, the institute cautioned that language from a divorce agreement should not be used because it may not reflect the reality of which parent a child resides with throughout the year.
