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All New Basis Consistency Regulations & IRS Form 8971

Instructional Method Advanced Preparation Program Prerequisites Field Of Study

 Group Internet Based

Experience Level Course ID CPE Credits Author
Basic  BB-201 1 Bradley Burnett

Basis Consistency and Form 8971 / Estate, Gift and Fiduciary Update

Course Description:

June 30 Deadline for Some Form 8971s is Coming Like a Freight Train. Are You in the Train’s Path Now or Later?

Breaking News!! During tax season, IRS planted a couple of nuclear bombs in its newly issued Form 8971 Basis Consistency Regulations:

1. IRS’ all new ZERO BASIS rule: If tax matters are mishandled at the estate level, the

beneficiary’s basis (for income tax purposes) in an inherited asset is zero!!

2. SUBSEQUENT TRANSFER rule: Any later transfer by a beneficiary (of an asset originally subject to Form 8971 reporting) itself must be reported on a newly generated Form 8971. IRS Form 8971, of course, is the controversial brand new form IRS requires an estate to

complete to report basis of inherited assets to (IRS and) beneficiaries. The due date of Forms 8971 (that were otherwise due) has been put off by IRS until June 30, 2016. Penalties for non compliance can be financially disastrous. Where is all of this coming from? The Highway Funding Bill (P.L. 114-41) created basis mania with 3 new statutes:

• New IRC §1014(f) – Heirs must use the estate tax value of assets received from an

estate as their income tax basis

• New IRC §6035 – Executors must report estate tax value of assets to IRS and heirs

• IRC §6501 – 6 year statute of limitations (on assessment) expanded to apply where

overstatement of asset basis omits more than 25% of gross income stated on return

IRS issued Form 8971 and prop/temp regs in response. There’s a whole lot to it than meets the eye and some unanswered questions to boot.

Course Outline:

Highway Funding Bill Basis Mania

§6501 – Extension of 6 Year Statute of Limitations to Basis Overstatements

New IRC §1014(f) – Basis Consistency Requirement

New IRC §6035 – Basis Reporting to IRS and Heirs

Congress Blocks the Trick Play

Treasury Response – Proposed and Temp Regs

Form 8971

Basis Consistency - Penalties for Non-Compliance

Zero Basis Rule

Later Adjustments to Value

Subsequent Transfers

Consistent Basis and Form 8971 – Future Outlook

Learning Objectives

To enlighten as to how Congress has mandated basis consistency in a broad variety of

contexts, including how the 3 year period of limitations for tax assessment is extended to 6

years, as well as basis of assets inherited by beneficiaries. To explore the timing and detail

of new IRS Form 8971 and the devastating consequences of failure to comply with the vast

array of Congress, Treasury and IRS’ new rules.

Intended Audience:

Those desiring to understand the broad, hard hitting impact and surprisingly far reach of

Congress’, Treasury and IRS’ new basis consistency rules. Income tax planners, estate

planners and affected taxpayers who desire to maintain advantage and comply with the

broadly applicable and potentially punishing new rules

Event Properties

Event Date 02-07-2019
Event End Date 02-07-2019
Individual Price $34.50
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