Whether you are the executor of an estate or anticipate inheriting assets from an estate, a new law has recently passed that makes reporting requirements much more thorough and extensive. Since the regulations are new and affect so many, it is important to understand how it impacts you.

The New Legislation Concerning Estates

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 was passed and enacted on July 31, 2015. The Act requires basis reporting statements be furnished to the IRS and beneficiaries. This applies to any taxable estate return filed after July 31, 2015.
Now, executors of taxable estates are responsible for preparing and furnishing statements to the IRS and benefices, reporting the value (basis) of assets in the estate. These reports are due within 30 days of filing the estate tax return.
For the first year of implementation, the IRS has delayed the due date for filing these statements until February 29, 2016 for estates that have already filed returns after July 31, 2015.

A Matter of Basis

The intention of the law is to aid the IRS in tracking the value of property reported on estate returns to make sure the beneficiaries inheriting the property are reporting the same value as basis on their tax returns. This helps to ensure consistent reporting of basis between estates and anyone acquiring property from the estate.

Inaccuracy Will be Penalized

If the IRS discovers an inconsistency between the basis reported on the beneficiary’s return and the estate tax return, accuracy related penalties will be applied on underpayments.
Failure to file these reporting statements will also result in “failure to furnish” penalties.

Regulations Still Being Developed

The reporting requirements are very new and detailed regulations are still being developed. The IRS has yet to release the final version of the new reporting form. But, as an estate executor, it’s important that you are aware of the new requirements and take appropriate steps to accurately report the proper values and establish the correct documentation

Want to Go Further?

We can help executors and beneficiaries to accurately report and document the basis. Our tax experts can help advise you on the best course of action. Contact us; with our years of technical experience, advanced training, and cutting edge technology, we are your financial partner.