Executors or administrators of estates, as well as surviving spouses, should thoroughly review Publication 559, Survivors, Executors, and Administrators. The publication includes information on:

Additional estate tax and gift tax information is available at What’s New – Estate and Gift Tax, and Estate and Gift Tax Information for 2010 Dates of Death and 2010 Gifts, below.

Also included in Publication 559 are the following items:

  • A checklist of the forms that may be needed and their due dates.
  • A worksheet to reconcile amounts that are reported in the decedent's name on information returns including Forms W-2, Wage and Tax Statement; 1099-INT, Interest Income; 1099-DIV, Dividends and Distributions; etc. The worksheet will help you correctly determine the income to report on the decedent's final return and on the return for either the estate or a beneficiary.

To apply for an Employer Identification Number (EIN) for a decedent’s estate, use Form SS-4, Application for EIN.  Applicants in the U.S. or U.S. possessions can apply for and receive an EIN free of charge on IRS.gov.

To change the estate’s address of record, use Form 8822, Change of Address (For Individual, Gift, Estate, or Generation-Skipping Transfer Tax Returns)PDF. The person who submits the Form 8822 for an estate must be the executor or a person with authority to submit the form on behalf of the estate.  Those persons may include a fiduciary of the estate who has submitted Form 56, Notice Concerning Fiduciary Relationship. Please allow 4 to 6 weeks for the processing of a change of address.

An estate tax closing letter (ETCL) is available only where a Form 706, U.S. Estate Tax Return, or Form 706-NA, Estate Tax Return for a nonresident not a citizen of the U.S., is filed, even if no Federal estate tax is due.  Note that an estate tax closing letter is not applicable to and is not available for Form 1041.  For more information on the estate tax closing letter, review Frequently Asked Questions on the Estate Tax Closing Letter.

Estate and Gift Tax Information for 2010 Dates of Death and 2010 Gifts

Congress made several changes to Estate and Gift tax laws in 2010 that may affect the estates of people who died in 2010 and beyond. We've posted the most common questions and answers below to help you. However, the laws on Estate and Gift taxes are considered to be some of the most complicated in the Internal Revenue Code. For further guidance, we strongly recommend that you visit with an estate tax practitioner (attorney or CPA) who has considerable experience in this field.

Estate, Gift and Generation-Skipping Transfer Tax Questions

Yes. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Relief Act) reinstated the estate tax for decedents dying after December 31, 2009. However, the 2010 Tax Relief Act increased the applicable exclusion amount to $5 million (up from $3.5 million for decedents dying in 2009). The 2010 Tax Relief Act also reduced the maximum tax rate for estates to 35 percent (down from 45 percent for decedents dying in 2009). Also, the 2010 Tax Relief Act allowed executors of the estates of decedents dying in 2010 to elect out of the estate tax system and use the new carryover basis rules enacted under the Economic Growth and Tax Relief Reconciliation Act of 2001.

Yes. The applicable exclusion amount for gifts made in 2010 is $1 million and the maximum tax rate is 35 percent. Furthermore, the 2010 Tax Relief Act repealed IRC Section 2511(c), which was applicable only for 2010 gifts under the Economic Growth and Tax Relief Reconciliation Act of 2001.

Yes. The 2010 Tax Relief Act retroactively reinstated the GST tax for transfers made in 2010; however, the applicable exclusion amount is increased to $5 million (up from $3.5 million for 2009 transfers) and the tax rate for 2010 is zero.

Yes, if the gross estate, plus adjusted taxable gifts and specific exemption exceeded $5 million as of the date of death. If, however, the executor properly elected out of the estate tax and elected to apply the new carryover basis rules enacted under the Economic Growth and Tax Relief Reconciliation Act of 2001, then a Form 706 would not have been filed. The Form 706 for estates of decedents dying in 2010 was revised July 2011 and published August 2011.

Pursuant to Notice 2011-76, the IRS granted the executor of a 2010 decedent an automatic six-month extension of time to file Form 706, and a six-month extension of time to pay the estate tax. The executor must have filed a Form 4768 by the due date for filing the Form 706. The executor was not required to substantiate on the Form 4768 the reason for requesting an extension of time for payment of the estate tax to receive the six-month extension of time to pay the estate tax due. However, interest will accrue on the estate tax liability from the due date of the return, excluding extensions. See I.R.C. § 6601.

The automatic six-month extension under Notice 2011-76 was also available to executors of decedents who were nonresident, noncitizens of the United States, who were required to file a Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return. The executor must have filed a Form 4768 by the due date for the filing of the Form 706-NA. The executor was not required to substantiate on the Form 4768 the reason for requesting an extension of time for payment of the estate tax to receive the six-month extension of time to pay the estate tax due. However, interest accrued on the estate tax liability from the due date of the return, excluding extensions. See I.R.C. § 6601.

Yes, if you made gifts that are subject to the gift tax. See Gift Tax and Frequently Asked Questions on Gift Tax. For more information, please contact your tax adviser.

Yes. Under current legislation, the estate tax is applicable for dates of death after 2010.  See Estate Tax and Frequently Asked Questions on Estate Tax.

The 2010 Tax Relief Act increased the applicable exclusion amount to $5 million for 2010 dates of death, but the Act also allowed executors of estates to elect out of the estate tax system and use the carryover basis rules enacted under the Economic Growth and Tax Relief Reconciliation Act of 2001.  The applicable exclusion for gifts made in 2010 was $1 million.

For basic exclusion amounts for dates of death after 2010, see Form 706 Changes at What’s New – Estate and Gift Tax.

Yes, unless the executor elected to apply the new carryover basis rules instead of the estate tax. For more information, you should consult your tax adviser.

Yes, if the gross estate, plus adjusted taxable gifts and specific exemption exceeded the applicable exclusion amount for the year of death. The 2010 Tax Relief Act does not change the estate tax for the estates of decedents who died before January 1, 2010; therefore, an estate tax return must be filed for those estates. For more information, please contact your tax adviser.

 

Basis Questions For Decedents who Died in 2010 and whose Executors Elected Out of the Estate Tax

For the estates of decedents dying after December 31, 2009, and before January 1, 2011, the executor may have elected out of the estate tax system and to use the new carryover basis rules under the Economic Growth and Tax Relief Reconciliation Act of 2001. Under that act, a recipient's basis in property acquired from the decedent who died in 2010 is the lesser of the decedent's adjusted basis (carryover basis) or the fair market value of the property on the date of the decedent's death.

However, there are two exceptions to this general rule:

  • The executor could have allocated up to $1.3 million, increased by unused losses and loss carryovers ($60,000 in the case of a decedent nonresident not a citizen of the United States, but with no loss or loss carryover increase) to increase the basis of property owned by the decedent at death (but not more than the property's fair market value); and
  • The executor could have also allocated an additional amount, up to $3 million, to increase the basis of property passing to a surviving spouse, either outright or in a Qualified Terminable Interest Property trust (but not more than the property's fair market value).

Probably yes. The decedent is treated as owning property transferred by the decedent during life to a qualified revocable trust (as defined in Section 645(b)(1)). You should consult your tax adviser to determine if the trust is a qualified revocable trust.

No. The decedent is not treated as owning any property by reason of holding a power of appointment with respect to such property. For more information, you should consult your tax adviser.

Yes. Generally, the surviving spouse's one-half share of community property is treated as owned by and acquired from the decedent for purposes of the basis adjustment rules. For more information, you should consult your tax adviser.

Notice 2011-76 changed the due date to January 17, 2012. 

For more information, you should consult your tax adviser.