What is basis and why does it matter? A basis is a monetary amount assigned to property for tax purposes. This value is very significant because the basis is used when calculating gains or losses on the sale of property. If you inherit property from a family member, friend or any generous benefactor, there will be a basis assigned to that property.
Recently, Congress enacted new basis reporting procedures as part of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which became effective on July 31, 2015. All estates that must file an estate tax return after July 31, 2015 are subject to these new basis reporting procedures.
Estates filing an estate tax return must now complete Form 8971. This form is sent to the IRS and lists basis values for property of the estate that has been or will be distributed to the beneficiaries. Each beneficiary will receive a Schedule A that lists the basis value that has been reported to the IRS.
Generally, all property of the estate is given a basis of its fair market value at one of two possible valuation dates. Since all of the property uses the same date, this is a strategic decision that needs to be given proper consideration. In addition, there are deadlines for reporting all of this information to the IRS. A qualified Florida attorney can help guide you through these issues.
Estate administration, including preparing for filing estate tax returns, is a complicated process. To discover whether your loved one’s estate needs to file an estate tax return and what steps need to be completed for proper administration of the estate, you should always consider contacting a qualified Florida attorney or lawyer to assist you.