Tuesday, September 13, 2011

IRS Extends Deadline for Form 8939 to January 17, 2012

The IRS issued Notice 2011-76 on September 13, 2011, extending the due date for Form 8939 from November 15, 2011 to January 17, 2012.  This form must be filed by Estates of 2010 decedents electing out of the estate tax system and into the carryover basis system.

The IRS also noted that estates of 2010 decedents may file Form 4768 to extend the due date for the Form 706 from September 19, 2011 to March 19, 2012, and that no penalties will be imposed for late payment of tax before that date.  Interest will still be assessed on late payments of tax, but the penalties will not apply.

See Notice 2011-76 for more details.

Monday, September 12, 2011

Trusts in Divorce Property Divisions

James R. Wade will be speaking at the Colorado Bar Association Continuing Legal Education Live Seminar in Denver on September 30, 2011 regarding Trusts in Divorce Property Divisions.

Program Description: Beneficial interests in trusts are being included in the pool of divisible assets in divorce in Colorado and a number of other jurisdictions.

Mr. Wade will specifically be discussing whether beneficiary withdrawal rights (including Crummey powers and 5x5 powers) are property, and also what the beginning time point is for measuring appreciation in value of trust interests which are characterized as property under the dissolution of marriage statutes. Mr. Wade often serves as a consulting or testifying expert regarding the characterization of such trust interests.

For more information, go to Colorado Bar Association or you can visit our website at www.wadeash.com.

Friday, September 9, 2011

Patenting Tax Strategies

Congress passed a new Patent Act on September 8, 2011 and President Obama is expected to sign it. As part of that Act, patents will not be granted for tax strategies submitted after the effective date of the Act. Prior patents that were granted for tax strategies (such as the SO-GRAT patent) are not affected by the new Act. We believe this is a positive development, and will encourage the continued sharing of tax strategies among professionals.

Final 2010 Form 706 and Instructions

After some confusion with initially posting an older version of the instructions, the IRS has posted both the Final Form 706 for decedents dying in 2010, and the Instructions.  The Form 706 is due September 19, 2011 for 2010 decedents who are not electing out of the estate tax regime and into the carryover basis regime, pursuant to the December 2010 Tax Act.  As mentioned in an earlier blog, you may wish to file Form 4768 prior to September 19, 2011 to extend the due date for filing the return for six months, to give yourself more time to determine which regime to file under.  To see the instructions, go to http://www.irs.gov/pub/irs-pdf/i706.pdf.

Friday, September 2, 2011

Form 8939 and 2010 Decedents

Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "Act"), the estate of a 2010 decedent can either stay with the estate tax system with a $5 million exemption, 35% tax rate and full stepped up basis to date of death value, or make an election out of the estate tax system and into the carryover basis system by filing a Form 8939. Form 8939 is due November 15, 2011 according to IRS Notice 2011-66, but the Form itself has still not been released. There will be no extensions of the November15, 2011 due date and the election, once made, is irrevocable, according to the Notice. See our  January 2011 newsletter for a more complete discussion of the Act.

Thursday, September 1, 2011

2011 Decedents and "Portability"

If a 2011 decedent is the first spouse to die, then in order for the surviving spouse to potentially double the estate tax exemption that will be available at his or her later death, under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “Act”) “portability” of the deceased spouse’s unused estate tax exemption must be elected on a timely filed U.S. Estate Tax Return (Form 706).  A draft of the 2011 Form 706 was released by the IRS on August 26, 2011, but does not seem to include a place to elect portability.  You may want to file a Form 4768 by the due date of the Form 706 (usually 9 months after date of death) to request an automatic 6-month extension and perhaps by then the manner of electing portability will be clear. See our January 2011 newsletter for a more complete discussion of this Act.