Tax Law

Filing Deadline for 2010 Estates Extended

Just days after posting the updated Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return,  the IRS issued Notice 2011-76 providing some relief for executors who are trying to make the difficult decision as to whether it would be better to pay estate tax or elect to take a transferred basis.  Prior to Notice 2011-76, the IRS had issued Notice 2011-66 which provided that estates could opt out of the estate tax and have the carryover basis rules apply by filing Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent on or before November 15, 2011.

Notice 2011-76 provides that the executor of a 2010 estate who timely files a Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, will receive an automatic six-month extension to file the estate tax return and a six- month extension to pay the estate tax due.   Practitioners and executors must be sure to note that interest will accrue on the estate tax liability from the due date of the return, excluding extensions.  Generally, no additional extensions will be granted.

In regards to filing Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, the due date is changed from November 15, 2011, to January 17, 2012. As with the Form 706, the IRS will not grant any additional extensions to file Form 8939.  In addition, any GST exemption allocations or GST tax elections made on a timely filed Form 8939 or Form 706 will be considered timely and effective as of the decedent's date of death.

The final version of Form 8939 has not yet been posted and the IRS has indicated that the draft form is undergoing significant changes.


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