The IRS has issued Form 8939 and long-awaited guidance for executors of decedents who died in 2010 and who are deciding whether to elect out of the estate tax and apply the carryover basis rules of Sec. 1022.
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Taxation of Estates & Trusts
Inflation Adjustments Made to Many Tax Items for 2012
The IRS released its annual revenue procedure making inflation adjustments to the income tax tables and many tax credits and other items for tax years beginning in 2012.
Estate Tax Protective Claim Procedures Detailed
The IRS issued guidance on filing a protective claim for refund of estate tax and notifying the IRS that the claim is ready for consideration.
Carryover Basis Election for 2010 Decedents’ Estates
The IRS issued guidance on the time and manner for making the election not to have estate tax apply to estates of decedents who died in 2010 (Notice 2011-66). The election must be made by November 15, 2011.
Significant Recent Developments in Estate Planning (Part II)
This article covers gift tax, generation-skipping transfer (GST) tax, trust developments, and the annual inflation adjustments for 2011 relevant to estate and gift tax.
Estate Not Entitled to Second Extension of Time to File Return
The First Circuit held that the regulations under Sec. 6081, which allow an executor of an estate only one six-month extension of time to file an estate tax return, were a reasonable interpretation of the statute.
Estates Must File Form 706 to Make Portability Election
The IRS alerted executors of the estates of decedents dying after December 31, 2010, of the need to file a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, within the time prescribed by law (including extensions).
2010 Estate Tax Payment, Carryover Basis Election Extended
Executors of estates of most decedents who died in 2010 now can get an automatic extension until March 19, 2012, to pay any estate tax due as well as to file an estate tax return, the IRS announced on September 13.
Estate Tax Form, Instructions Finalized for 2010; Due September 19
The IRS posted the instructions for Form 706 for decedents dying in 2010. For most 2010 decedents, the due date is September 19.
IRS Proposes New Rules for Deducting Fiduciary Fees
The IRS issued proposed regulations intended to reflect the Supreme Court’s 2008 holding in Knight on income tax deductibility by estates and nongrantor trusts of investment advisory and other fees.
Clawback of the Gift Tax
The lifetime gift tax exclusion increased to $5 million for 2011 and 2012, and there is concern that the IRS will attempt to assess either an additional gift tax or extra estate tax if the lifetime exclusion is subsequently reduced.
Selected Issues Concerning the State Income Taxation of Nonresident Trusts and Estates
This column discusses selected state income tax issues for nonresident trusts that are a direct result of several recent challenges, including societal and marketplace conditions, increasingly complex tax laws, and declining state revenues.
IRS Issues Guidance on Carryover Basis Rules for 2010 Decedents’ Estates
The IRS issued guidance on the time and manner for making the election not to have estate tax apply to estates of decedents who died in 2010.
IRS Finalizes Automatic Five-Month Extension for Partnership, Trust and Estate Returns
Final regulations set the time for automatic extensions of partnership, trust and estate income tax returns at five months (T.D. 9531). Under this rule, the extended returns and Schedules K-1 for partners and beneficiaries will generally be due September 15.
Guidance on Unbundling Trustee Fees Extended
The IRS announced that it is extending interim guidance on the treatment of investment advisory fees and other costs subject to the 2% floor under Sec. 67(a).
Portability of Unused Estate and Gift Tax Exclusion Between Spouses
One of the essential elements in the equation for the computation of both the federal gift and estate tax is the reduction of the tax due by the amount of the estate or gift tax on the applicable exclusion amount. Because of changes to the tax law, a surviving spouse may be able to increase his or her applicable exclusion amount by the amount of the unused exclusion amount of the deceased spouse. The term “applicable exclusion amount” has been redefined to include the sum of the basic exclusion amount and the deceased spousal unused exclusion amount.
IRS Extends Guidance on Trustee Fees
The IRS announced that it is extending interim guidance on the treatment of investment advisory fees and other costs subject to the 2% floor under Sec. 67(a).
Discharge of Indebtedness Rules Clarified for Grantor Trusts and Disregarded Entities
The IRS issued proposed regulations that provide rules regarding who is the “taxpayer” for purposes of applying the Sec. 108 discharge of indebtedness rules to a grantor trust or disregarded entity.
Death and Taxes: Executors Beware
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act revised tax law for estates of decedents dying in 2010, 2011, or 2012. The new rules apply for 2010 unless an executor elects to use prior law.
The Estate Tax Dilemma: Protecting the Interest Expense Deduction on Estate Loans
If the requirements can be met, Graegin loans can be an indispensible option for estates seeking liquidity to pay expenses without liquidating the underlying estate assets.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
