IRS Issues Guidance on 2010 Estates; Still No Form 8939


The IRS recently published Revenue Procedure 2011-41, which gives personal representatives safe harbor guidance on basis allocation. Under the Revenue Procedure, the $1.3 million and $3 million basis step-ups can be increased by the amount of the decedent’s unused net operating loss and capital loss carryovers. If the decedent owned loss assets (assets worth less than their basis), the amount of the loss can also be added to the basis step up.

The Revenue Procedure also provides that when a beneficiary allocates basis to a depreciable asset, the added basis is treated as though it were part of a new asset that was first placed in use on the decedent’s death.

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