Lewis Law Office, P.A.

With the addition of a reporting requirement of the asset basis/value for Estates, Form 8971 (Schedule A) is now used to report to recipients the basis (value) of inherited assets in compliance with the "consistency rule" of IRC 1014(f). With the consistency rule, heirs are to be provided with the tax basis of assets they receive. For some taxpayers this is a wonderful informational tool so that years will not pass and they suddenly need to determine their own tax reporting basis upon disposition of an inherited asset! For others who serve as the executor or personal representative of a taxable estate it is a burden to them as they now must send Schedule A within 30 days after filing of the Estate's Form 706 or the due date of the 706 with extensions, whichever is earlier. Supplemental statements are also required for changes in value that make the prior statement incomplete or incorrect.

If no estate tax is due, then the consistency rule does not apply to any assets in the estate. However, if an estate tax is due, then the consistency rule applies to ALL assets in the estate not otherwise excepted. Exceptions include assets for which there is a marital or charitable deduction and tangible personal property for which an appraisal is not required (under $3K in value). This applies to estate tax returns filed after 7/31/15. Other items not listed on a Schedule A include: Cash (other than coin collections), IRD, and property sold or disposed of by the estate where gain/loss is recognized. Finally, the responsibility to report values does not end until all values are "final". Caution is also advised as there can be a reporting requirement when there is a subsequent transfer to a related transferee by a beneficiary.