IRS Delays Due Date for Choosing Basis Allocation for Decedents Dying in 2010

The IRS announced that it is delaying the due date for Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, past its original April 18 due date, but did not announce what the new due date will be (IR-2011-33). Therefore, for decedents who died in 2010, the form does not need to be filed with a decedent’s final Form 1040. A decedent’s final Form 1040 is still due April 18.

So far, the IRS has released only a draft Form 8939 for 2010, and it announced that it would issue guidance and then a final form and a due date. The IRS did not announce when that would happen.

Form 8939 is used to establish the basis of property acquired from a person who died in 2010. This is complicated because executors can elect to not have the estate tax and step-up in basis rules apply for 2010. Instead, executors can opt out of the estate tax for 2010 and have modified carryover basis rules apply. For more coverage of this, see Brophy, “Death and Taxes: Executors Beware,” 42 The Tax Adviser 270 (April 2011).

The IRS announcement states that the Service plans to issue future guidance that will provide a deadline for filing Form 8939 and for electing to have the estate tax rules not apply to the estates of persons who died in 2010. The IRS says the forthcoming guidance will also explain how an executor of an estate will make the election to have the estate tax not apply and promises that “a reasonable period of time for preparation and filing will be given between issuance of the guidance and the deadline for filing Form 8939 and for electing to have the estate tax rules not apply.” However, the announcement does not say how long that period will be.