On Jan. 29, 2016, the Internal Revenue Service released Form 8971, “Information Regarding Beneficiaries Acquiring Property From a Decedent” (here) with instructions (here). The form must be filed by any estate with an estate tax return that was required to be filed after July 31, 2015. Generally, the form must be filed within 30 days of the filing of the estate tax return; however, IRS Notice 2015-57 (Aug. 21, 2015) extended the deadline to Feb. 29, 2016.
As background, Form 8971 implements new basis consistency requirements enacted by Congress in 2015. Under the new law, executors are required to provide the finally determined estate tax value of an estate’s property to the IRS and the beneficiary receiving such property.
Key Practice Points:
(1) An executor who chooses to file a Form 706 to make an allocation or an election, but is otherwise not required to file, may not have to file a Form 8971;
(2) An executor is required to submit the entire form to the IRS; however, the executor has to provide beneficiaries only with Schedule A of the form;
(3) The form must be filed separately from all other tax returns; and
(4) An executor must file a supplemental Form 8971 with the IRS and provide an updated Schedule A to the affected beneficiary within 30 days of any final adjustments.