Estate Basis Consistency Rules for Fiduciaries: IRS Final Regulations, Reporting Requirements, Distribution Strategies

The basis consistency rules present challenges to tax compliance advisers, fiduciaries, and estate counsel. The rules create filing obligations for executors of taxable estates but also impact distribution decisions and litigation strategies. Estate planners must grasp the wide-ranging impact of the estate basis consistency rules and planning strategies to avoid unnecessary taxes and penalties.

IRC Sections 1014(f) and 6035 set the guidelines for the basis consistency regime. IRC Section 1014(f) mandates that an asset's reported estate tax value and the basis of the asset when acquired by the estate beneficiary must be consistent. IRC 6035 requires estate executors to identify the value of property reported on the estate tax return to both the IRS and the estate beneficiaries.

The requirement to furnish basis information to all beneficiaries creates a substantial burden on fiduciaries. Additionally, the mandate to match basis on assets between Form 706 and the beneficiaries' tax returns complicates determining and making distributions. Executors will have to balance the tax situations of the beneficiaries with the needs of the estate in distributing property.

Recently, the IRS finalized and issued the estate basis consistency rules which provide some relief to estate planners and families handling inherirances relating to reporting to beneficiaries, rules for property transfers, and other key items. However, challenges still remain that must be considered by estate planners.

Listen as our experienced panel provides a comprehensive and practical guide to the estate basis consistency rules as they impact executors and estate planners.

1. Section 1014 basis consistency rules
   • IRS final rules
   • Estates subject to basis consistency
   • Property subject to basis rule
   • Final value determination methods
   • Zero basis rule and other tax consequences due to omission or non-reporting
2. Section 6035 reporting requirements
3. Supplemental reporting requirements
4. Distribution considerations and strategies

The panel will review these and other relevant topics:

• Key provisions of recent IRS final estate basis consistency rules
• Reporting property on Form 8971
• Coping with scenarios in which the executor does not wish to disclose asset basis values to a particular beneficiary
• Rules on post-mortem basis adjustments to estate assets
• Penalties for failure to disclose all assets on Form 8971 and Schedule A
• How fiduciaries should remedy reporting mistakes or failures
• Distribution concerns and strategies under the basis consistency reporting rules

Learning Objectives

After completing this course, you will be able to:

• Understand rules on post-mortem basis adjustments to estate assets
• Recognize penalties for failure to disclose all assets on Form 8971 and Schedule A
• Ascertain methods on how fiduciaries should remedy reporting mistakes or failures
• Discern best techniques for establishing basis in assets
• Ascertain when filing Form 8971 is required

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate, gift and trust taxation including various trusts types, the unified credit, and portability.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).