The IRS has finalized the regulations that offer guidance on the statutory requirement that a recipient’s basis in certain property acquired from a decedent be consistent with the value of the property as finally determined for federal estate tax purposes, the Journal of Accountancy reported.
Additionally, the final regulations offer guidance on the statutory requirements that executors and other persons provide basis information to the IRS and to the recipients of certain property.
The IRS regulations state "Section 1014(f)(1) provides that the basis of certain property acquired from a
decedent cannot exceed that property’s final value for purposes of the Federal estate
tax imposed on the estate of the decedent, or, if the final value has not been
determined, the value reported on a required Statement. This statutory rule is referred
to as the consistent basis requirement.
According to the IRS, the finalized regulations [TD 9991] on the statutory consistent basis requirement impact recipients of property acquired from a decedent if including the property’s value in the decedent’s gross estate increases the federal estate tax liability.
The final regulations regarding the statutory basis reporting requirements also impact executors and other individuals who are required to file an estate tax return based on the value of the decedent’s gross estate and the amount of the decedent’s lifetime adjusted taxable gifts, as well as trustees making in-kind distributions of property that were initially acquired from a decedent that was subject to the statutory basis reporting requirements.
The changes to the regulation harken back to June 27, 2016, when the Treasury Department and the IRS held a public hearing on the proposed regulations.
In addition to the comments received at the hearing, the agencies received about 30 written comments on the proposed regulations.
The IRS said that after considering all of the comments, it is adopting the proposed regulations with certain revisions. These revisions considerably reduce the burden on both the IRS and taxpayers and increase the administrability of the proposed rules.
These revisions include the following:
• Removal of the zero basis rule for unreported property;
• Adoption of a suggested interpretation of the term "acquiring" for purposes of section 6035(a)(1);
• Elimination of the subsequent transfer reporting requirement for all beneficiaries other than trustees;
• Exception of additional types of property interests from the consistent basis requirements and the reporting requirements under section 6035.
The final regulations became effective on Sept. 17, upon their publication in the Federal Register.