What's new - estate and gift tax

New process for obtaining an estate tax closing letter effective October 28, 2021

Final regulations, User Fee for Estate Tax Closing Letter (TD 9957 PDF), establishing a new user fee of $67 for persons requesting the issuance of IRS Letter 627, Estate Tax Closing Letter (ETCL) will be effective October 28, 2021. For more information see Frequently asked questions on the Estate Tax Closing Letter.

E-signatures for estate and gift tax forms extended to October 31, 2025

For more information, go to Details on using e-signatures for certain forms.

Mailing address changes for estate and gift tax returns

See Filing estate and gift tax returns for information on new mailing addresses for Form 709, and the Form 706 series (706, 706-NA, 706-GS(D), 706-GS(T), 706 Schedule R-1, 706-A, and 706-QDT), as well as Forms 8892 and 8855.

Making large gifts now won't harm estates after 2025

On November 26, 2019, the IRS clarified that individuals taking advantage of the increased gift tax exclusion amount in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels. The IRS formally made this clarification in final regulations released that day. The regulations implement changes made by the Tax Cuts and Jobs Act (TCJA), tax reform legislation enacted in December 2017. For more information, see the related Tax Reform page.

Transcript Delivery Service (TDS) now available for estate tax accounts

The Transcript Delivery Service (TDS) which provides authorized practitioners the ability to view and print instant account transcripts for estate tax returns is now available on IRS.gov.

To register for TDS, access e-Services - Online tools for tax professionals

1. Select "GO" under Transcript Delivery System (TDS)

2. Sign Up or Log In

If you have difficulty registering online via Secure Access, or you are an existing e-Services user and need exception processing, call the e-Help desk at 888-841-4648 (select your language, then prompt 1 and remain on the line until an assistor picks up) 7:30 a.m. Eastern to 7 p.m. Eastern. Additional tips can be found in the e-Services Hot Topics.

For step-by-step instructions on securing an estate tax transcript, access Transcripts in lieu of Estate Tax Closing Letters on IRS.gov.

Consistent basis reporting between estate and person acquiring property from decedent

On Monday, September 16, 2024, the IRS issued final regulations (TC 9991) on consistent basis reporting between an estate and a person acquiring property from a decedent.

The final regulations provide guidance regarding the requirement that a recipient’s basis in certain property acquired from a decedent be consistent with the value of the property as finally determined for Federal estate tax purposes. This consistent basis reporting is required by H.R. 3236, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which was signed into law on July 31, 2015.
The law created Section 6035, which requires the executor of an estate required to file an estate tax return to also provide statements to the IRS and to beneficiaries acquiring certain property from a decedent. This requirement also applies to 6018(b) filers.

Note: If the estate is not required to file an estate tax return (see Which Estates Must File in the Instructions for Form 706 PDF, and Who Must File in the Instructions for Form 8971 PDF, please do not file Form 8971. Doing so may result in unnecessary correspondence from the IRS.

The law also added Section 1014(f), which requires consistent basis reporting between an estate and the beneficiary acquiring certain property from a decedent.

These changes apply to any estate tax return filed, and to property with respect to which an estate tax return is filed, after July 31, 2015.

How do I know which estate tax return to file? Form 706 or Form 706-NA?

See the new FAQ, How do I know which estate tax return to file?  Form 706 or Form 706-NA?

Form 706 changes

The basic exclusion amount for the year of death is as follows:

Basic exclusion amount for year of death

For estate tax returns after 12/31/1976, Line 4 of Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return PDF, lists the cumulative amount of adjusted taxable gifts within the meaning of IRC section 2503. The computation of gift tax payable (Line 7 of Form 706) uses the IRC section 2001(c) rate schedule in effect as of the date of the decedent's death, rather than the actual amount of gift taxes paid with respect to the gifts.

With the top bracket tax rates decreasing from 55 percent (in 2001) to 35 percent (in 2010), and then increasing to 40 percent (in 2013), the IRS has encountered situations where gift taxes paid were greater than the tax calculated using the rate in effect at the date of death.

It appears that some Form 706 software used by practitioners require a manual input of the gift tax payable line. Some preparers are reporting gift taxes actually paid rather than calculating the gift tax payable under date of death rates. These errors result in underpayment of estate tax due. Cases with this issue will involve estates where large gifts were made during life and at a time when tax rates were higher than at date of death. (Posted 6-5-06)

Beginning January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent's unused exclusion to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse. Note that simplified valuation provisions apply for those estates without a filing requirement absent the portability election. See the Instructions to Form 706 for additional information.

Exclusions

The annual exclusion amount for the year of gift is as follows:

Annual exclusion per donee for year of gift

For basic exclusion amounts, see the table above, in Form 706 changes.

Federal transfer certificates (international)

For more information about securing a transfer certificate, please see:

• Transfer certificate filing requirements for the estates of nonresident citizens of the United States
• Transfer certificate filing requirements for the estates of nonresidents not citizens of the United States