A recent Forbes magazine article sheds light on a new law that will serve to prevent beneficiaries from overstating the original value of an inherited property when selling it to lessen their tax burden. The IRS has been well aware of the loophole, which had allowed beneficiaries to bypass the value that the estate had placed on a property and argue for a higher one.
When you factor in a federal capital gains tax of 23.8% upon the sale of an inherited asset (such as property or a business), the resulting tax savings can be huge. So huge, that this law is estimated to bring an additional $1.5 Billion into the Treasury over the next 10 years.
According to the Forbes piece, "Although executors and beneficiaries of estates with tax returns filed after July 31, 2015 have to mind the new law, they’re still stuck waiting for Internal Revenue Service guidance on exactly what to do by a February 29, 2016 deadline."
The IRS has published a DRAFT of Form 8971 ("Information Regarding Beneficiaries Acquiring Property from a Decedent". This is only a DRAFT and is not to be used for filing!
To discuss how this new law may impact you and/or your loved ones, call us to schedule an appointment: (301) 468-3220