CPA Practice Advisor reports that the AICPA)has submitted a letter to the IRS recommending updates to the instructions for Form 8971—an essential form used by estate executors to report the value of inherited property to both the IRS and beneficiaries. The updates would align the instructions with final regulations issued last fall (T.D. 9991), which aim to ensure consistency in the reporting of estate tax values. 

In its letter, the AICPA highlighted two key areas where it believes clarification is needed. First, the organization is asking for clearer instructions on when and how to file a supplemental Form 8971 and accompanying Schedule A forms, which are required if there are changes to the original valuation or distribution. Second, the AICPA is seeking guidance on whether a Schedule A must be sent to a previously revocable trust that has become part of a dependent’s estate, within 30 days of filing Form 706. 

These recommendations are meant to help tax practitioners and executors better understand their responsibilities and avoid compliance issues.

“The AICPA was pleased that the final regulation contained many of our recommendations,” said Eileen Sherr, Director of Tax Policy and Advocacy at the AICPA. “As updates to the Form 8971 instructions are considered, we suggest including our additional guidance to enhance clarity and compliance.”