Property Acquired From the Decedent Generally, section determines a recipient's basis in property, but only if the property is acquired from the decedent. Generally, property acquired from the decedent includes the following. Property acquired by bequest, devise, or inheritance, or by the decedent's estate from the decedent.
Property transferred by the decedent during the decedent's lifetime to: a. A qualified revocable trust as defined in section b 1 , or b. Any other trust with respect to which the decedent reserved the right to make any change in the enjoyment thereof through the exercise of a power to alter, amend, or terminate the trust.
Any other property passing from the decedent by reason of death to the extent that such property passed without consideration. Section does not apply to a decedent's interest in a QTIP trust or similar arrangement funded for the benefit of the decedent by the decedent's predeceased spouse.
A recipient's basis in this property will not be determined under section Section also does not apply to property that constitutes a right to receive an item of income in respect of a decedent under section Property Eligible for Increase to Basis Generally, the executor can allocate additional basis under section up to the FMV of the property to property acquired from the decedent that was owned by the decedent at the time of death.
Property Owned by the Decedent at the Time of Death The basis of property acquired from the decedent can be increased by an allocation of Basis Increase only if and to the extent the property was owned by the decedent at the time of death. For information about ownership, see Rules relating to ownership, in the Instructions for Form The result is that, for each property, the sum of the decedent's adjusted basis in that property and the Basis Increase allocated to that property cannot exceed the FMV of that property on the decedent's date of death.
The executor can allocate Basis Increase to property owned by and acquired from the decedent on a property-by-property basis. For example, the executor can allocate Basis Increase to one or more shares of stock or to a particular block of stock rather than to the decedent's entire holding of that stock. Basis Increase may not be allocated separately to a life estate and remainder interest in the same property. Decedent's Adjusted Basis Generally, the adjusted basis of the property in the hands of the decedent as of the date of the decedent's death is the decedent's cost or other basis, adjusted as required by sections , , and , or as otherwise specifically provided for under applicable provisions of Internal Revenue laws.
Fair Market Value FMV Generally, for purposes of section , the FMV of property is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.
However, for a decedent who was neither a resident nor citizen of the United States, the General Basis Increase is limited to the Aggregate Basis Increase limited as described below. Generally, the executor can allocate Spousal Property Basis Increase only to qualified spousal property that was both acquired from and owned by the decedent.
Qualified spousal property means: Outright transfer property; and Qualified terminable interest property. Penalty Relief For certain penalty relief related to the recipient's income tax return and computing the recipient's income tax liability, see Notice How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways.
By selecting the method that is best for you, you will have quick and easy access to tax help. Free help with your return. Free help in preparing your return is available nationwide from IRS-certified volunteers. Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim.
For more information on these programs, go to IRS. Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Check the status of your refund. Go to IRS. Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return.
If you filed Form with your return, wait 14 weeks 11 weeks if you filed electronically. Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Download forms, including talking tax forms, instructions, and publications. Order IRS products online.
Research your tax questions online. Search publications online by topic or keyword. Use the online Internal Revenue Code, regulations, or other official guidance. Figure your withholding allowances using the withholding calculator online at www. Sign up to receive local and national tax news by email. Get information on starting and operating a small business. Many services are available by phone. Ordering forms, instructions, and publications. Call TAX -FORM to order current-year forms, instructions, and publications, and prior-year forms and instructions.
You should receive your order within 10 days. Asking tax questions. Call the IRS with your tax questions at Solving problems. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an appointment. To find the number, go to www. TeleTax topics. Call to listen to pre-recorded messages covering various tax topics.
Refund information. To check the status of your refund, call or automated refund information 24 hours a day, 7 days a week. If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back.
Other refund information. Addressing another common concern about carryover basis, section 4. The publication of these two documents at this time, the confidence with which the November 15 due date is announced, and other indications that these documents are part of a more comprehensive guidance package all suggest that release of the long-awaited Form , its instructions, and the related Publication cannot be too far behind. Please click here for a full listing of Fiduciary Advisory Services lawyers and their locations.
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It is not clear whether these penalties apply per return, per beneficiary, or per property, but they are subject to abatement if due to reasonable cause Sec. In addition, the estate and beneficiaries could be subject to penalties for understatement of tax for years to come if they sell or depreciate assets using an overstated basis. To calm fears about penalties applying before the final Form and its instructions were released, the IRS announced that no penalties will apply to understatements of tax caused by incorrect estimates of the basis of carryover basis property Notice Return preparers can also be subject to penalties under Sec.
But if Form is categorized with flowthrough Forms , U. Return of Partnership Income, and S, U. Fiduciaries are not considered tax return preparers Regs. Finally, appraisers can be subject to penalties for misstatements of value. If an executor discovers a need to amend Form , Notice allows the executor to file an amended return after January 17, , without a private letter ruling under two circumstances. First, an executor may file an amended return at any time to allocate the spousal basis increase, but only if the original Form was timely filed and complete.
Second, an executor may file an amended return for any reason except to make or revoke an election on or before July 17, , but only if the executor timely filed an original Form by January 17, Notice Beyond those two circumstances, the executor will need a private letter ruling to amend Form Notice states that such relief will be granted under Regs.
It also provides that such relief will be granted if the executor wishes to reallocate basis as a result of an IRS audit of Form and resulting redetermination of value. In no event will the IRS grant a request to reduce an allocation of basis. However, the individual has the normal appeal rights, including filing a Tax Court petition. The beneficiary can challenge the basis reported by the executor on Schedule A of Form However, the beneficiary should have credible evidence to support his or her position.
Beneficiaries will use the information reported on Form , Schedule A, for many years to come in reporting sales and depreciating inherited property on their returns.
Therefore, despite the length of time without IRS guidance and the short window to file the Form once the IRS released it, practitioners should complete the form with the best information available. Disclosure is generally the most effective remedy for uncertain positions. Editor Notes. For more information about this article, contact Ms. Cantrell at ccantrell bvccpa. Business meal deductions after the TCJA.
This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction. This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID Toggle search Toggle navigation.
Cantrell, CPA, J. General Observations A few general observations are necessary as one prepares the Form Executor Only the executor, if one has been appointed, can make the election. Late Returns The IRS will not grant an extension of time past January 17, , to file Form or accept protective or conditional elections, except in the case of individuals serving in the United States Armed Forces under Sec. Property acquired from the decedent includes: Property acquired by bequest, devise, or inheritance; Property the decedent transferred during his or her lifetime to a qualified revocable trust whether or not the trust makes a Sec.
Proving Up Basis Rev. Consistency of Basis While taxpayers are generally required to report income consistently with information returns, there is no similar requirement for reporting basis consistently Sec.
Property Eligible for a Basis Increase Only property that is owned by the decedent is eligible for a basis increase Sec. Appraisals and Other Attachments Rev.
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