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IRS Form 8939 | Remember, Remember, the 15th of November…


California Trusts, Estate Planning AttorneyAugust 16, 2011
by Kira S. Masteller

Not because of Guy Fawkes Night, commonly celebrated November 5th, and there is no gunpowder, treason or plot here. 

If anything, there is opportunity, because November 15th is an important deadline for filing IRS Form 8939.  For those of you who had a family member pass in 2010, the form can reap huge savings in your estate planning trusts

Along with the deadline, the IRS also issued guidance for using the form. Here’s how it breaks down (though it may seem very much like a rather twisted plot at first glance): 

1. An Estate Executor can opt out of paying estate tax for a decedent who died in 2010 and have the carryover basis rules apply (Form 8939). 

2. If the Executor files IRS Form 8939 to avoid estate taxes, then the estate assets would not receive a step-up in basis to Fair Market Value (FMV) as of the decedent’s date of death.  The assets would inherit the decedent’s cost basis in assets as governed by IRC § 1022. 

3. On the other hand, the Estate Executor can elect to allocate $1.3M to increase some assets’ basis to the FMV of the date the decedent passed.  The decision should be made on an Estate by Estate basis. 

4. Donors can elect to opt out of automatic allocation of the Generation-Skipping Transfer (GST) tax exemption for direct skips in 2010. (The IRS also clarified when 2010 GST tax returns are due.) 

5. There will be no deadline extensions. 

As usual with the IRS, the guidance may very well sound like it’s designed to confuse the average citizen, and worthy of some Guy Fawkes-like scrutiny. But if you need help with your California estate and tax planning in general, or with Form 8939 in particular, just give us a call: 818.990.9120. 

Kira S. Masteller is a California Estate Planning Attorney. You can reach her by e-mail:

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