2010 Executors - Are You Ready to Allocate that Basis?
Today I was alerted to the existence of a draft of the IRS from that will be required to be filed for estates of decedents dying in 2010 with estates in excess of $1.3 million. IRS Form 8939 - Allocation of Increase in Basis for Property Received from a Decedent. The due date is April 15, 2011.
This form is necessitated by the Modified Carryover Basis rules that replaced the estate tax for 2010. Each decedent's estate gets $1.3 million worth of basis to allocate to appreciated assets, with an additional $3 million for assets going to a surviving spouse. IRC Section 1022. The allocated basis will effectively eliminate capital gains tax liability for assets sold soon after death.
Is this in lieu of a 706 or would it accompany a 706?
RESPONSE: In lieu of.
Does this mean the basis can be stepped up for the Surviing spouse share of community property in the amount of $3M?
RESPONSE: No, the step up would be in the inherited share.
Are 2010 Federal and State income tax refunds considered income to my mother's estate? There was also about $50 in interest from a seller financed loan. With these items, will I need to file the 1041 as well as the 1040? Thanks.
RESPONSE: There are many considerations affecting the requirement or desirability of filing a 1041 for an estate. The filing threshold is $600, except for a final return. Final returns can also carry out losses to the beneficiaries, which can be beneficial for tax purposes. I recommend that you consult with a knowledge tax attorney or CPA.