CLARITY AND CONSISTENCY: FINAL ESTATE TAX REGULATIONS ON CONSISTENT BASIS AND REPORTING

Written by Michael Gerson, Esq. and Liz Lindsay-Ochoa, Esq.^*

I. SYNOPSIS

In July 2015, newly enacted federal tax statutes added complexities to the administration of a decedent’s estate.⁰¹ Those laws included a new mandate for the executor of a decedent’s estate to furnish a statement to beneficiaries who acquired property included in the decedent’s gross estate for federal estate tax purposes to identify the estate tax value of such assets acquired by that beneficiary.⁰² Another new requirement was a broadening of the duty of a beneficiary to use a consistent basis,⁰³ so that the basis of an asset for income tax purposes could be no greater than the basis as finally determined for estate tax purposes, or if the final value has not been determined, as reported on a statement filed with the Internal Revenue Service ("IRS").⁰⁴ Those statutes are effective for estate tax returns filed after July 31, 2015.⁰⁵ On September 17, 2024, the IRS issued final regulations regarding these new reporting and compliance obligations.⁰⁶

In a previous article in the California Trusts and Estates Quarterly, one of the co-authors of this article wrote about these new obligations as part of a two-part series on these statutes.⁰⁷ This article is the second and final article in this series. Part II of this article provides background about the above two new requirements. Part III discusses various aspects of the final regulations, such as filing deadlines and reporting to beneficiaries. Part IV focuses on changes between the proposed regulations and the final regulations that may be of interest to practitioners. Part V provides a few examples to help explore the final regulations and their effects. Part VI provides a conclusion to this article.