California Estate Planning Blog by Kevin Staker

January 7, 2010

Estate Tax Return Required for Any Step Up in Basis in 2010?

Filed under: Uncategorized — Kevin Staker @ 7:58 pm
Tags: , ,

Please someone show me how I am wrong but I believe we now need to file an estate tax return for each decedent with any appreciated capital assets.

IRC Section 1022(a) effective Jan. 1 now provides for a general rule of carryover basis. Section 1022(b) has an exception allowing for up to $1,300,000 in basis increase (note I do not see in the law where “aggregate basis increase” is actually defined). 1022(c) allows for an additional $3,000,000 basis increase in property going to the spouse and appears to retain the full step up basis for community property.

However, I read Section 1022(d)(3) to mean that such basis increase must be allocated in a return under Section 6018, which is an estate tax return.

Therefore, for every decedent in 2010, even a little old lady with a condo she bought for $100,000 and now worth $250,000, it appears we need to file an estate tax return so the beneficiaries can get the step up in basis when they sell the condo.

Am I wrong?

Kevin Staker
kgs@staker.com

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2 Comments »

  1. I believe you are correct.

    Comment by Bernie Greenberg — February 1, 2010 @ 7:57 pm | Reply

  2. Kevin, I am not an expert, just one of the millions of Sons trying to work through Sucessor Trustee duties for a parent lost in 2010.

    First let me applaud you for recognizing this need in early January 2010.

    I thought possibly this link released by IRS 15 months later might provide more insite.
    http://www.irs.gov/newsroom/article/0,,id=237978,00.html
    Treasury Dept. and IRS Extend the Deadline for Filing Form 8939 Beyond the Previously Set April 18; Guidance to Follow with a New Deadline

    Comment by Gale Darterr — April 17, 2011 @ 12:09 pm | Reply


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