The passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act into law on December 17, 2010 ushered in sweeping changes to the laws governing federal estate taxes, gift taxes and generation skipping transfer taxes for deaths occurring in 2010, 2011 and 2012. Below you will find a summary of the rules that apply to the estates of decedents who die between January 1, 2010 and December 31, 2010.
Decedent is Single, Gross Estate is Valued Less Than $5,000,000
If the decedent was single at the time of death and the gross value of his or her estate did not exceed $5,000,000, then estate was not required to file IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Nonetheless, the heirs should have consulted with an estate planning attorney or tax attorney in order to determine if Form 706 should have been filed for other reasons, such as locking in date of death values of the decedent's assets to establish their stepped up basis, or allocating the decedent's unused generation-skipping transfer tax exemption to testamentary trusts created under the decedent's estate plan.
If it was determined that an estate tax return should have been filed, then for deaths that occurred between January 1 and December 17, 2010, the return was due on or before September 19, 2011 (since September 17 was a Saturday), and for deaths that occurred between December 18 and December 31, 2010, the return was due 9 months after the date of death. Nonetheless, IRS Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, could have been filed on or before the due date for Form 706 in order to request an automatic 6-month extension of time within which to file the return.
Decedent is Single, Gross Estate is Valued Over $5,000,000
If the decedent was single at the time of death and the gross value of his or her estate exceeded $5,000,000, then the choice should have been made between applying the estate tax rules and the modified carryover basis rules since there would be a breaking point at which the estate tax bill would exceed the estimated capital gains tax that would be paid by the heirs when the inherited property is sold.
If it was determined that an estate tax return should have been filed, then for deaths that occurred between January 1 and December 17, 2010, the return was due on or before September 19, 2011 (since September 17 was a Saturday), and for deaths that occurred between December 18 and December 31, 2010, the return was due 9 months after the date of death. Nonetheless, IRS Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, could have been filed on or before the due date for Form 706 in order to request an automatic 6-month extension of time within which to file the return.
If it was determined that the modified carryover basis rules should be applied instead of the estate tax rules, then IRS Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, is due on or before January 17, 2012. In general, extensions of time to file this type of return will not be granted and amended returns will only be accepted under limited circumstances. Information on extensions and amendments can be found in the 8939 instructions and Notice 2011-66.
Decedent is Married, Gross Estate is Valued Less Than $5,000,000
If the decedent was married at the time of death and the gross value of his or her estate did not exceed $5,000,000, then estate was not be required to IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Nonetheless, the surviving spouse should have consulted with an estate planning attorney or tax attorney in order to determine if Form 706 should have been filed for other reasons, such as locking in date of death values of the decedent's assets to establish their stepped up basis or allocating the decedent's assets between the A trust and B trust in a typical AB Trust estate plan.
If it was determined that an estate tax return should have been filed, then for deaths that occurred between January 1 and December 17, 2010, the return was due on or before September 19, 2011 (since September 17 was a Saturday), and for deaths that occurred between December 18 and December 31, 2010, the return was due 9 months after the date of death. Nonetheless, IRS Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, could have been filed on or before the due date for Form 706 in order to request an automatic 6-month extension of time within which to file the return.
Decedent is Married, Gross Estate is Valued Over $5,000,000
If the decedent was married at the time of death and the gross value of his or her estate exceeded $5,000,000, then the choice should have been made between applying the estate tax rules or the modified carryover basis rules since there would be a breaking point at which the estate tax bill would exceed the estimated capital gains tax that would be paid by the heirs when the inherited property is sold.
If it was determined that an estate tax return should have been filed, then for deaths that occurred between January 1 and December 17, 2010, the return was due on or before September 19, 2011 (since September 17 was a Saturday), and for deaths that occurred between December 18 and December 31, 2010, the return was due 9 months after the date of death. Nonetheless, IRS Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, could have been filed on or before the due date for Form 706 in order to request an automatic 6-month extension of time within which to file the return.
If it was determined that the modified carryover basis rules should be applied instead of the estate tax rules, then IRS Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, is due on or before January 17, 2012. In general, extensions of time to file this type of return will not be granted and amended returns will only be accepted under limited circumstances. Information on extensions and amendments can be found in the 8939 instructions and Notice 2011-66.
Summary of 2010 Estate Tax Filing Deadlines
September 19, 2011 - Due date for 2010 Form 706 or Form 4768, for deaths that occurred between January 1 and December 17, 2010
9 months from date of death - Due date for 2010 Form 706 or Form 4768, for deaths that occurred between December 18 and December 31, 2010
January 17, 2012 - Due date for Form 8939
March 19, 2012 - Due date for 2010 Form 706 for applicable estates (deaths between January 1 and December 17, 2010) that timely filed Form 4768
15 months from date of death - Due date for 2010 Form 706 for applicable estates (deaths between December 18 and December 31, 2010) that timely filed Form 4768
