On Friday August 5, 2011 the IRS issued guidance providing assistance to executors choosing to opt out of the estate tax and have carryover basis rules apply to the estate of a decedent who died in 2010. The Notice provides the time and manner in which the executor of an applicable estate elects to have the estate tax not apply, and thereby have the carryover basis rules apply to property transferred as a result of the 2010 decedent’s death. Electing executors will have to file Form 8939, due November 15, 2011, which details the allocation of any basis increase to property acquired from the 2010 decedent. In order to opt out of the estate tax and have the new carryover basis rules apply, Form 8939 must be filed. The election to opt out of the estate tax is irrevocable once made, and the attendant consequences must be scrutinized before entering such an election. Form 8939 has not yet been issued, but will be issued early this fall (along with its instructions).
Further, Notice 2011-66, 2011-35 IRB, provides safe harbor guidance regarding property acquired from estates of decedents who died in 2010. The Notice also addresses how a donor may elect out of the automatic allocation of generation-skipping transfer (GST) tax exemption to direct skips occurring during 2010.
The language of Notice 2011-66 is welcome, albeit belated, direction for advisors and executors of estates of decedents who died in 2010. The attorneys of Williams Coulson routinely handle such estate tax and administration matters and are available to address any questions you may have