Colorado Probate Blog - Wade Ash Woods Hill & Farley, P.C.

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Draft Instructions to 1041 Include Basis Reporting

As noted in a post last summer, the "Highway Bill" signed into law on July 31, 2015 requires executors of estates filing U.S. Estate Tax Returns (Form 706) on or after that date to file a statement with the IRS within 30 days, and to report the fair market value of assets on the return to the beneficiaries. These values must be used by the estate on its Form 1041, and the beneficiaries for basis-reporting purposes, but only if the estate was taxable. In Notice 2015-57, 2015-36 IRB, the IRS delayed the due date for both the information return and the statement until February 29, 2016. The draft instructions to the 2015 Form 1041 that were just released also require consistent basis reporting. The instructions to Schedule D include the statement: "The beneficiary must use a basis consistent with the estate tax value of the property to determine his or her gain or loss when the property is sold or deemed sold."

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