In a letter submitted to the Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) has provided comments regarding the updating of instructions for Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent. The Treasury and IRS are currently considering updating the form instructions for the final regulations issued on September 16, 2024 (T.D. 9991) on consistent basis reporting between an estate and persons acquiring property from decedent.
Form 8971 is an important tax form for estates required to file a federal estate tax return. Executors file this form to report the final estate tax value of property distributed or to be distributed from the estate. This form, along with a copy of every Schedule A, is used to report values to the IRS and ensure that both the IRS and beneficiaries receive consistent valuations for inherited property.
In the letter, the AICPA identified two areas it believes additional guidance is necessary:
- Provide further guidance on the duty to supplement – Treasury and IRS should provide further guidance on the duty to supplement. Specifically, it would be helpful to have clear instructions on when it is necessary to file a supplemental Form 8971 and Schedules A.
- Provide clarification on whether a Schedule A needs to be provided to a previously revocable trust included in a decedent’s estate within 30 days of filing Form 706.
“The AICPA was pleased that the final regulations contained many of our recommendations,” says Eileen Sherr, AICPA director of tax policy and advocacy. “As updates to the Form 8971 instructions are considered, we suggest that Treasury and IRS include our recommendations to enhance taxpayer and tax practitioner clarity and compliance.”
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Tags: estate planning, Taxes
