AICPA Urges Congress to Modify Deadline for Reporting Estate Basis

The American Institute of CPAs (AICPA) has written Congress to urge it to modify the reporting deadline for estate basis statements.  The AICPA is proposing a reporting deadline of February 15 following the end of the calendar year in which an estate distributes assets to a beneficiary, rather than 30 days after an estate files the federal estate tax return. 

Adopting the AICPA’s proposed change would “streamline the process and make the reporting more accurate and useful” to the beneficiaries and the Internal Revenue Service (IRS), Troy K. Lewis, chair of the AICPA Tax Executive Committee, wrote in the letter. 

Lewis explained that in 2015 Congress amended Internal Revenue Code section 1014 to provide for the consistent use of the value of property passing from a decedent’s estate and the value subsequently used by the beneficiary to determine gain or loss upon the disposition of such property acquired from a taxable estate. 

Congress also added section 6035, which requires the executor of any estate required to file a return under section 6018(a) to furnish to the Secretary of the Treasury and to each person acquiring an interest in property included in the decedent’s gross estate for federal estate tax purposes a statement identifying the value of each interest in such property as reported on such return and such other information with respect to such interest as the Secretary may prescribe.  Section 6035(a)(3) states that the time for filing such statement is 30 days from the earlier of the date the return was required to be filed (including extensions, if any) or the date the return was actually filed.

“For many estates, the executor does not know within thirty days after filing the estate tax return which beneficiary will receive what asset.  In fact, it is customary that many, if not most, executors do not fully distribute estate assets until after they have received the IRS closing letter to ensure that there are sufficient funds in the estate to meet its federal and state tax obligations,” Lewis wrote.

Lewis stated the AICPA’s proposal would:

• Continue the reporting of estate basis to beneficiaries and the IRS;
• Maintain the intent of the provision;
• Simplify and improve the administrative process;
• Result in more accurate reporting; and
• Provide more meaning to the information provided by the executor to beneficiaries.