On August 23, 2010, Forbes.com published Seven Steps For 2010 Heirs, by Deborah L. Jacobs. In this timely article, Jacobs summarizes the carryover basis rules that currently apply in 2010 for inherited assets. Jacobs provides and discusses seven steps that inheritors and their advisers need to take in 2010. The bullets underneath each step are highlights from Jacobs’s article, which should be read in its entirety:
- Have assets appraised.
- carryover basis, income tax in 2010
- Jacobs provides a helpful example
- Locate purchase records.
- records prove basis
- consensus regarding estimating cost basis
- complications with real estate
- Delay selling appreciated assets.
- with step-up in basis, there is no income tax when executor sells assets; with carryover basis, there could be an income tax
- one interesting interpretation of section 901(b) of EGTRRA
- conflicting views by two practitioners on whether executors should sell assets in 2010
- Postpone distributions.
- retroactive estate tax or carryover basis?
- the need to set aside money to pay for an estate tax or a capital gains tax
- Extend paperwork deadlines.
- reporting carryover basis
- IRS has not created a form
- Apply the basis allowance fairly.
- problems can arise “when an executor is also a beneficiary”
- analogy to “when all assets were valued as of the date of death”
- Guard against an executor's added risks.
- 2010 “seems to leave an executor extra vulnerable”
- no guidance, no forms
- tips for executors
Like this article, Jacobs’s book on estate planning is very useful. Widely praised for its plain English approach, Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide has another virtue while the estate tax is in flux: Jacobs issues updates that can be downloaded from the book's Web site www.estateplanningsmarts.com, and tweets at http://twitter.com/djworking.
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