IRS Delays New Inherited Property Reporting Requirements Until February 2016

Published on: 13:44PM Aug 24, 2015

On July 31, 2015, President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 which included a new provision requiring reporting of income tax basis of property inherited if the estate was required to file an estate tax return.  This new provision applies to estates that occurred after July 31, 2015.

Effective with these estates, the income tax basis reported on heirs when they sell the property cannot exceed

  • The final value determined for purposes of the estate tax valuation, or
  • The value shown on a statement required to be filed under the new provision.

The new provision required the estate to file this statement within 30 days of filing the estate tax return.  However, since the IRS has not had a chance to set up the format of this statement and other provisions related to implementation, the IRS just released Notice 2015-57 that indicated that these statements will not be due until at least February 29, 2016 even if the original due date under the law would be before that date.

Again, this law only applies to those estates that are required to file an estate tax return.  For 2015 estates, this essentially means that the gross taxable estate needs to be larger than $5.43 million.  Many of our farmers will be under this limit, however, with the rapid increase in land prices over the last few years, it would not take too many good farmland acres to exceed this amount.