IRS Extends Deadline for Carryover Basis Form for 2010 Estates
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The IRS is extending the filing deadline of Form 8939, Allocation of Increase in Basis of Property Acquired from a Decedent, which must be submitted to determine the new basis of assets in 2010 estates that opt out of the federal estate tax.
The form will no longer be due on April 18, and the IRS will issue more guidance at a future date and set the new deadline at “a reasonable period of time” after that, according to a statement issued on March 31, 2011.
The estate tax was eliminated in 2010 due to a phase-out approved in 2001, but under TRA 2010 enacted in December, the tax was reinstated at a top rate of 35% with a $5 million threshold for individuals and $10 million for married couples.
Estates have an alternative option to allocate up to $1.3 million in basis to estate assets, with an additional $3 million for assets passing to a surviving spouse. To the extent the increased basis does not bring the basis to fair market value, the heirs would then pay capital gains taxes on inherited assets they sell.
The extension will be of help to executors of estates opting to for carryover basis, because determining the cost basis of property, including stock held for decades, or a family business, may require extensive research.
