New law imposes immediate estate basis and reporting requirements
One tax law change recently made by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, P.L. 114-41, affects practitioners right away. Section 2004 of the act requires consistent reporting of basis between an estate and anyone acquiring property from the decedent and imposes new reporting requirements.
The provision became effective on the date of enactment, which was July 31, 2015. The new reporting rules require statements to be furnished to the IRS and to beneficiaries within 30 days of the estate tax return’s due date, so for estates that had returns due Aug. 1, the statements are due by this Aug. 31.
The act makes a couple of changes to the Code. First, it amends Sec. 1014 to require that the basis of property acquired from a decedent be consistent with the basis reported on the estate tax return. In the case of property for which the final value has been determined for estate tax purposes, the acquirer’s basis cannot exceed that final value for estate tax purposes.
For property for which the final value has not been determined for estate tax purposes but for which basis has been reported under new Sec. 6035 to the person acquiring the property, the acquirer’s basis cannot exceed that reported value.
The Sec. 1014 amendment only applies to property where the inclusion of the property in the decedent’s estate increased the estate tax.
If basis is reported inconsistently between an estate tax return and a beneficiary’s return, taxpayers may be subject to the Sec. 6662 accuracy-related penalty on underpayments. Read more the Journal of Accountancy.