Table of Contents
- Purpose of Form
- Who Must File
- When To File
- Where To File
- Supplemental Forms 8971 and Schedules A
- Rounding Off to Whole Dollars
- Penalties for Inconsistent Filing
- Obtaining Forms and Publications To File or Use
- Specific Instructions
- Part I — Decedent and Executor Information
- Part II — Beneficiary Information
- Signature and Verification
- Schedule A — Information Regarding Beneficiaries Acquiring Property From a Decedent
The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 requires executors of an estate and other persons who are required to file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return or Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return Estate of nonresident not a citizen of the United States, to report the final estate tax value of property distributed or to be distributed from the estate, if the estate tax return is filed after July 2015. Form 8971, along with a copy of every Schedule A, is used to report values to the IRS. One Schedule A is provided to each beneficiary receiving property from an estate.
Certain property received by a beneficiary may be subject to a consistency requirement, meaning that the beneficiary can’t use a value higher than the value reported on Schedule A as the beneficiary’s initial basis in the property.
An executor of an estate or other person(s) required to file Form 706 or Form 706-NA under sections 6018(a) and 6018(b), if the return is filed after July 2015, and whether or not that form is filed timely, is required to file Form 8971 with attached Schedule(s) A with the IRS and to provide each beneficiary listed on the Form 8971 with that beneficiary’s Schedule A. See the Instructions for Form 706 or Form 706-NA, for more information on the filing requirement for those forms.
Form 8971 isn’t required when:
The gross estate plus adjusted taxable gifts is less than the basic exclusion amount;
Estate tax-related forms (for example, Forms 706-QDT, 706-CE, and 706-GS(D), other than those mentioned above are filed;
The estate tax return is filed solely to make an allocation or election respecting the generation-skipping transfer tax; or
The estate tax return is filed solely to elect portability of the deceased spousal exclusion amount (DSUE).
Form 8971 (including all attached Schedule(s) A) must be filed with the IRS and only the Schedule A is to be provided to the beneficiary listed on that Schedule A, no later than the earlier of:
The date that is 30 days after the date on which Form 706 or Form 706-NA is required to be filed (including extensions) with the IRS; or
The date that is 30 days after the date Form 706 or Form 706-NA is filed with the IRS.
If the first Form 706 or Form 706-NA is filed both after the form’s due date (including extensions) and after July 2015, the Form 8971 and Schedule(s) A are due 30 days after the filing date.
Form 8971 is a separate filing requirement from the estate’s Form 706 or 706-NA, and shouldn't be attached to the respective estate tax return. Form 8971 and attached Schedule(s) A must be filed with the IRS, separate from any and all other tax returns filed by the estate.
Notice 2016-27, 2016-15 I.R.B. 576, available at www.irs.gov/irb/2016-15_IRB/index.html, made June 30, 2016, the due date for:
All Forms 8971 (including the attached Schedule(s) A) required to be filed with the IRS after July 31, 2015, and before June 30, 2016; and
All Schedules A required to be provided to beneficiaries after July 31, 2015, and before June 30, 2016.
If the due date falls on a Saturday, Sunday, or legal holiday, the executor of an estate or other person(s) may file on the next business day.
File Form 8971 (including all Schedule(s) A) at the following address.
Department of the Treasury
Internal Revenue Service Center
Mail Stop #824G
Cincinnati, OH 45999
A beneficiary can be provided Schedule A:
In person to an individual beneficiary, to the trustee(s) of a beneficiary trust, or to the executor(s) of a beneficiary estate;
By U.S. mail to the beneficiary’s last known address; or
By private delivery service to the beneficiary’s last known address (see below).
The executor of the estate (or other person required to file) must certify on Form 8971, Part II, column D, the date on which Schedule A was provided to each beneficiary and should keep proof of mailing, proof of delivery, acknowledgment of receipt, or other information relevant for the estate’s records. In cases where a trust or another estate is a beneficiary and has multiple trustees or executors, providing Schedule A to one trustee or executor is enough to meet the requirement.
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The value of the property to be reported on the initial Form 8971 and the attached Schedules A is the fair market value of the asset as reported on the estate tax return. However, the final value for purposes of the federal estate tax may differ from that reported on the estate tax return. A value is considered “final” when:
The value of the property shown on an estate tax return filed with the IRS isn't contested by the IRS before the period of assessment expires;
The value of the property is specified by the IRS and isn't timely contested by the estate (or other person required to file under section 6018(b)); or
The value of the property is determined by a court or pursuant to a settlement agreement with the IRS, including the resolution of a claim for abatement or refund.
If information reported on Form 8971 and the Schedule(s) A filed with the IRS or provided to a beneficiary differs from the final value (as the result of the resolution of a valuation dispute or otherwise), the executor or other person required to make this filing must file a supplemental Form 8971 and affected Schedule(s) A with the IRS and provide an updated supplemental Schedule A to each affected beneficiary no later than 30 days after the adjustment. See Where To File, earlier. On both the supplemental Form 8971 and each supplemental Schedule A, the “Supplemental Filing” box should be checked and only the information that has changed should be reported.
If the initial Form 8971 and Schedule(s) A identify several beneficiaries who might receive the same property, the estate may, but isn’t required to, file a supplemental Form 8971 and Schedule(s) A to specify the actual distribution of that property among the identified beneficiaries.
If the executor or other person required to file Form 8971 has been notified that a Form 706 or Form 706-NA, related to the Form 8971 and Schedule(s) A has been selected for examination, a copy of the supplemental Form 8971 with attached supplemental Schedule(s) A should be provided to the office conducting the examination.
The value of property should be reported in U.S. dollars and rounded to whole-dollar amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.55 becomes $3. If you add two or more amounts to figure an item's value, include the cents when adding the amounts and round off only the total.
An executor may be subject to penalties for failure to file and/or furnish correct Forms 8971 and Schedule(s) A even if there was no tax due on the estate tax return.
$50 per Form 8971 (including all Schedule(s) A) if it is filed within 30 days after the due date. The maximum penalty is $532,000 per year (or $186,000 if the taxpayer qualifies for lower maximum penalties, as described below).
$260 per Form 8971 (including all Schedule(s) A) if it is filed more than 30 days after the due date or if it isn't filed. The maximum penalty is $3,193,000 per year ($1,064,000 if the taxpayer qualifies for lower maximum penalties, as described below).
A TIN is a Social Security Number (SSN), an Employer Identification Number (EIN), an Individual Taxpayer Identification Number (ITIN), or any other number used by the IRS in the administration of tax laws. See Part II—Beneficiary Information, later, for information on obtaining the TIN of a beneficiary of the estate.
$50 per Schedule A if it is provided within 30 days after the due date. The maximum penalty is $532,000 per year (or $186,000 if the taxpayer qualifies for lower maximum penalties, as described below).
$260 per Schedule A if it is provided more than 30 days after the due date or if it isn't provided. The maximum penalty is $3,193,000 per year ($1,064,000 if the taxpayer qualifies for lower maximum penalties, as described below).
Beneficiaries who report basis in property that is inconsistent with the amount on the Schedule A may be liable for a 20% accuracy-related penalty under section 6662.
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Complete Form 8971 and each attached Schedule A in its entirety. A form or schedule filed with the IRS without entries in each field won't be processed. A form with an answer of “unknown” won't be considered a complete return.
A beneficiary is an individual, trust, or other estate who has acquired (or is expected to acquire) property from the estate. If the executor is also a beneficiary who has acquired (or is expected to acquire) property from the estate, the executor is a beneficiary for purposes of the Form 8971 and Schedule A.
Some foreign beneficiaries may not be required to provide a TIN to the estate. If the foreign beneficiary isn’t required to provide a TIN, enter “Not Required” in the TIN entry space.
When completing Form 2848, remember the executor, not the estate, is the “taxpayer” to be listed in line 1, and the TIN listed should also be the executor's TIN. Also, when filling out line 3, enter “Civil Penalties” in the Description of the Matter column, “Form 8971/Schedule A” in the Tax Form Number column, and the decedent's date of death using the four-digit year and two-digit month as “YYYYMM” in the Year(s) or Period(s) column.
A paid preparer may sign original or amended returns by rubber stamp, mechanical device, or computer software program.
All executors shown on Form 8971 and listed on any attached statement are responsible for the reporting requirements related to Form 8971 and Schedule(s) A. However, it is enough for only one of the executors to sign Form 8971.
Form 8971 is signed under penalties of perjury and all executors are responsible for the information included on Form 8971 and Schedule(s) A as filed with the IRS and Schedules A provided to beneficiaries. All executors are also liable for all applicable penalties.
Executors of estates filing Form 8971 are required to complete a Schedule A for each beneficiary that acquired (or is expected to acquire) property from the estate. You will need a copy of the Form 706 or Form 706-NA filed by the estate of the decedent to complete this schedule. All property acquired (or expected to be acquired) by a beneficiary must be listed on that beneficiary’s Schedule A. If the executor hasn't determined which beneficiary is to receive an item of property as of the due date of the Form 8971 and Schedule(s) A, the executor must list all items of property that could be used, in whole or in part, to fund the beneficiary’s distribution on that beneficiary’s Schedule A. (This means that the same property may be reflected on more than one Schedule A.) A supplemental Form 8971 and corresponding Schedule(s) A may, but aren’t required to, be filed once the distribution to each such beneficiary has been made.
A cash bequest acquired (or expected to be acquired) by a beneficiary isn’t considered reportable property for purposes of Form 8971/Schedule A.
Use and duplicate page A-2 (Schedule A—Continuation Sheet) if additional space is needed to list the property acquired (or expected to be acquired) by a beneficiary. Attach a copy of each completed Schedule A to Form 8971 and submit to the IRS. Provide a copy of each Schedule A only to the beneficiary named on that Schedule A. Do not provide a copy of the Form 8971 to a beneficiary. See the instructions under Where To File, earlier.
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