4 Things Beneficiaries Who Receive IRS Form 8971’s Schedule A Must Know by Jacey Hayes

In her article, Jacey Hayes discusses a new IRS form, 8971, which individuals are required to file for estate tax returns from July 31, 2015 on, along with a Schedule A. Hayes begins,

When someone inherits assets, he or she is supposed to have a tax basis in the inherited asset for income tax purposes equal to the “fair market value” of the inherited asset at the date of death. The IRS is concerned that it is losing billions of dollars due to improper basis reporting for inherited assets: that is, the executor reports the assets on the estate tax return at one value, and then when those same assets are later sold, exchanged, or transferred by the beneficiary, the beneficiary reports the basis at a higher value. To tackle this concern, all estates which file an estate tax return after July 31, 2015, also must now file, within 30 days after filing the estate tax return, new IRS Form 8971, and provide a Schedule A to each beneficiary. A beneficiary’s Schedule A must also be given to the beneficiary within the same time frame. (Note that for all estate tax returns filed between August 1, 2015 and May 31, 2016, the due date of Form 8971 was postponed to June 30, 2016, leading to a flood of recent filings.)

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Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal