August 26,2011

New estate tax guidance from the Internal Revenue Service offers limited relief for executors who want to file amended carryover basis returns, Steve Akers, a managing director with Bessemer Trust in Dallas, told BNA Aug. 25.

So-called 9100-2 relief in Treasury Department regulations, outlined in Notice 2011-66, allows estate executors to amend their Form 8939 by May 15, 2012. It is perhaps the broadest of four relief provisions IRS granted to combat a general Nov. 15 due date for filing the form, he said.

In only one instance are estates allowed to file an amended Form 8939 after the due date, and that is for the sole purpose of allocating spousal property basis increase.

However, the regulations allow executors who file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, in a timely way to file a second return within six months to make other “regulatory or statutory elections.” Akers said it is presumed this will be used to allocate basis increase.

Form 8939 will be used by estates to opt out of the estate tax and into the carryover basis regime under Section 1022, for property transferred as a result of the decedent’s death in 2010.

Private Letter Rulings

Another type of relief, under 9100-3, involves paying a $14,000 user fee to get a private letter ruling to allocate additional basis increase. This relief is granted only if the executor discovers additional property for allocating remaining basis increase, or the fair market value of the property reported on the form is adjusted as a result of an IRS audit.

In the final exception, executors can use 9100-3 relief to apply for an extension of time to file the Form 8939, or even to make the modified carryover basis election in the first place.