All New Basis Consistency Regulations and IRS Form 8971 (video)

  • Credits: 1
  • Format: Self-Study Video
  • Field of Study: Federal Tax Law
  • Author/Speaker: Bradley Burnett
Course ID: Advanced Preparation: Experience Level:
EWTFM-T-01737-21-S | 6233-CE-0462 None Overview
Published Date: Program Prerequisites: Other Course Formats:
© June 2020 Basic Understanding of Taxation Audio | OnDemand Webinar | Live Webinar

June 30 Deadline for Some Form 8971s is Coming Like a Freight Train. Are You in the Train’s Path Now or Later?

Breaking News!! During tax season, IRS planted a couple of nuclear bombs in its newly issued Form 8971 Basis Consistency Regulations:

1. IRS’ all-new ZERO BASIS rule: If tax matters are mishandled at the estate level, the beneficiary’s basis (for income tax purposes) in an inherited asset is zero!!

2. SUBSEQUENT TRANSFER rule: Any later transfer by a beneficiary (of an asset originally subject to Form 8971 reporting) itself must be reported on a newly generated Form 8971. IRS Form 8971, of course, is the controversial brand-new form IRS requires an estate to complete to report the basis of inherited assets to (IRS and) beneficiaries. The due date of Forms 8971 (that were otherwise due) has been put off by IRS until June 30, 2016. Penalties for noncompliance can be financially disastrous. Where is all of this coming from? The Highway Funding Bill (P.L. 114-41) created basis mania with 3 new statutes:

  • New IRC §1014(f) – Heirs must use the estate tax value of assets received from an estate as their income tax basis
  • New IRC §6035 – Executors must report estate tax value of assets to IRS and heirs
  • IRC §6501 – the 6-year statute of limitations (on assessment) expanded to apply where the overstatement of asset basis omits more than 25% of gross income stated on return IRS issued Form 8971 and prop/temp regs in response. There’s a whole lot to it that meets the eye and some unanswered questions to boot.

Topics include:
  • Highway Funding Bill Basis Mania
  • §6501 – Extension of 6 Year Statute of Limitations to Basis Overstatements
  • New IRC §1014(f) – Basis Consistency Requirement
  • New IRC §6035 – Basis Reporting to IRS and Heirs
  • Congress Blocks the Trick Play
  • Treasury Response – Proposed and Temp Regs
  • Form 8971
  • Basis Consistency - Penalties for Non-Compliance
  • Zero Basis Rule
  • Later Adjustments to Value
  • Subsequent Transfers
  • Consistent Basis and Form 8971 – Future Outlook

Learning Objectives:

After reading the course material, you will be able to:

  • To enlighten as to how Congress has mandated basis consistency in a broad variety of contexts, including how the 3-year period of limitations for tax assessment is extended to 6 years and the basis of assets inherited by beneficiaries.
  • To explore the timing and detail of the new IRS Form 8971 and the devastating consequences of failure to comply with the vast array of Congress, Treasury, and IRS’s new rules.

Who Should Attend:
  • All Certified Public Accountants (CPAs)
  • Enrolled Agents (EAs)
  • Tax Return Preparers (TRPs)

Qualifies and Approved with all State Boards of Accountancy and the following sponsorship’s: