Estates and Beneficiaries: Consistent Basis Reporting

Congress passed and the President signed H.R. 3236, 114th Cong., 1st Sess. into law on July 31, 2015), the Highway and Transportation Funding Act (“the ACT”), which provides three months funding of federal highway and transit programs, and includes revenue offsets The act now requires that any beneficiary who receives property from an estate must not treat the property received as having a basis higher than the basis reported by the estate for estate tax purposes.

The Act also requires administrators of estates that are required to file an estate tax return to provide information returns to the IRS and payee statements to any beneficiary who acquires an interest in property from the estate. The required statements must identify the value of each interest in property that was reported in the estate tax return.

These new basis reporting rules apply to property included in an estate tax return that is filed after the Act’s date of enactment-July 31, 2015..

This new tax law change is yet another reason to file the Form 706 even though not required since consistency of basis reporting is in the best interest of the administrator of the estate and the beneficiary.