PLR 1321003: IRS grants extra time for a 2010 estate basis election

Plain-English summary

The IRS granted the personal representative of a 2010 decedent’s estate 120 additional days to file Form 8939, make the § 1022 election, and allocate additional basis to eligible property. The personal representative had retained a tax professional but did not timely file the required form. The IRS concluded that the requirements for relief under Treasury Regulation § 301.9100-3 were satisfied. The ruling did not determine whether any particular property was eligible for a § 1022 basis allocation.

Ruling snapshot

• Question: May the estate make a late § 1022 election and allocate additional basis by filing Form 8939?
• Outcome: Approved, with 120 days to file Form 8939.
• Key authorities: IRC §§ 1022 and 9100; Notice 2011-66; Notice 2011-76

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201321003 Third Party Communication: None
Release Date: 5/24/2013 Date of Communication: Not Applicable
Index Number: 1022.00-00, 9100.00-00
Person To Contact:
------------------------------------------------------------ -------------------, ID No. ------------------

• Telephone Number:
  ----------------------------------------- -----
  --------------------------- Refer Reply To:
  --------------------------------------------- CC:PSI:04
  -------------------------------------------------- PLR-132678-12
  Date:
  January 15, 2013

Legend

Decedent = ---------------------------------------------------

Dear -----------------:

   This letter responds to your representative’s letter of July 23, 2012, requesting an

extension of time pursuant to § 301.9100-3 of the Procedure and Administration
Regulations to file a Form 8939 (Allocation of Increase in Basis for Property Acquired
from a Decedent) to make the Section 1022 Election and to allocate basis provided by
section 1022 of the Internal Revenue Code (Code) to eligible property transferred as a
result of Decedent’s death.

   The facts and representations submitted are as follows. Decedent died in 2010.

The personal representative for Decedent’s estate retained a tax professional to advise
her on estate tax matters including the necessity to file a Form 8939. The personal
representative of Decedent’s estate is requesting an extension of time pursuant to
§ 301.9100-3 to file the Form 8939 to make the Section 1022 Election and to allocate
basis provided by section 1022 to eligible property transferred as a result of Decedent’s
death.

Law and Analysis:

   Section 1022(a) provides that property acquired from a decedent who died after

December 31, 2009, is treated as transferred by gift, and the basis of the person
acquiring the property from such a decedent is the lesser of the adjusted basis of the
decedent or the fair market value of the property at the date of the decedent's death.
PLR-132678-12 2

  Section 1022(b)(1) provides, in general, that the basis of property under section

1022(a) is increased by basis increase that is allocated to the property.

  Section 1022(b)(2)(A) provides, in general, that basis increase is the portion of

the aggregate basis increase that is allocated to the property.

    Section 1022(b)(2)(B) provides that the aggregate basis increase is $1,300,000,

and under paragraph (2)(C), aggregate basis increase is increased by--(i) the sum of
the amount of any capital loss carryover under section 1212(b), and the amount of any
net operating loss carryover under section 172 that would (but for the decedent's death)
be carried from the decedent's last taxable year to a later taxable year of the decedent,
plus (ii) the sum of the amount of any losses that would have been allowable under
section 165 if the property acquired from the decedent had been sold at fair market
value immediately before the decedent's death. Section 1022(b)(3)(A) and (B) provide
that in the case of a decedent nonresident not a citizen of the United States, the amount
of aggregate basis increase available under section 1022(b)(2)(B) is limited to $60,000,
and section 1022(b)(2)(C) does not apply.

  Section 1022(c)(1) provides that in the case of property that is qualified spousal

property, the basis of such property under section 1022(a) (as increased under section
1022(b)) is increased by spousal property basis increase allocated to the property.

    Section 1022(c)(2)(A) provides, in general, that spousal property basis increase

is the portion of the aggregate spousal property basis increase which is allocated to the
property. Section 1022(c)(2)(B) provides that the aggregate spousal property basis
increase is $3,000,000.

    Section 1022(d)(1)(A) provides, in general, that the basis of property acquired

from a decedent may be increased under section 1022(b) or (c) only if the property was
owned by the decedent at the time of death. Section 1022(d)(1)(B) describes property
that is considered to be owned by the decedent at the time of death.

   Section 1022(d)(2) provides that the basis adjustments under sections 1022(b)

and (c) shall not increase the basis of any interest in property above its fair market value
in the hands of the decedent as of the date of the decedent's death.

   Section 1022(d)(3) provides, in general, that the executor is to allocate the basis

adjustments under sections 1022(b) and (c) on the return required by section 6018 and
that any allocation made may be changed only as provided by the Secretary.

 Section 1022(e) describes property that is considered to be acquired from the

decedent for purposes of section 1022.
PLR-132678-12 3

   Subtitle A of title V of the Economic Growth and Tax Relief Reconciliation Act of

2001, P.L. 107-16 (115 Stat. 76-81), enacted section 2210, which made chapter 11 (the
estate tax) inapplicable to the estate of any decedent who died in 2010 and chapter 13
(the generation-skipping transfer (GST) tax) inapplicable to generation-skipping
transfers made in 2010. On December 17, 2010, Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010 (TRUIRJCA), P.L. 111-312 (124 Stat.
3296), became law, and section 301(a) of TRUIRJCA retroactively reinstated the estate
and GST taxes. However, section 301(c) of TRUIRJCA allows the executor of the
estate of a decedent who died in 2010 to elect to apply the Code as though section
301(a) of TRUIRJCA did not apply with respect to chapter 11 and for property acquired
or passing from a decedent (within the meaning of section 1014(b)). Thus, section
301(c) of TRUIRJCA allows the executor of the estate of a decedent who died in 2010
to elect not to have the provisions of chapter 11 apply to the decedent’s estate, but
rather, to have the provisions of section 1022 apply (the Section 1022 Election).

   Notice 2011-66, 2011-35 I.R.B. 184, section I.A. provides that the executor of the

estate of a decedent who died in 2010 makes the Section 1022 Election by filing a Form
8939 on or before November 15, 2011. Notice 2011-76, 2011-40 I.R.B. 479, extended
the due date of the Form 8939 and thus, the election, from November 15, 2011 to
January 17, 2012.

   Notice 2011-66, section I.D.1, provides that the Internal Revenue Service will not

grant extensions of time to file a Form 8939 and will not accept a Form 8939 filed after
the due date except in four limited circumstances provided in section I.D.2. Under this
section of Notice 2011-66, an executor may apply for relief under § 301.9100-3.

   Based on the facts submitted and the representations made, we conclude that

the requirements of § 301.9100-3 have been satisfied. Therefore, the personal
representative of Decedent’s estate is granted an extension of time of 120 days from
the date of this letter to make the Section 1022 Election on a Form 8939 and allocate
additional basis to eligible property as provided by section 1022. A copy of this letter
should be attached to the Form 8939.

   Except as expressly provided herein, no opinion is expressed or implied

concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter. Specifically, we express or imply no opinion on whether the
property is eligible to allocate basis provided by section 1022.

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)

provides that it may not be used or cited as precedent.
PLR-132678-12 4

  The rulings contained in this letter are based upon information and

representations submitted by the taxpayer and accompanied by a penalty of perjury
statement executed by an appropriate party. While this office has not verified any of the
material submitted in support of the request for rulings, it is subject to verification on
examination.

                                  Sincerely,

                                  Associate Chief Counsel
                                  (Passthroughs & Special Industries)



                                  By:_____________________________
                                  James F. Hogan
                                  Chief, Branch 4
                                  Office of Associate Chief Counsel
                                  (Passthroughs & Special Industries)

Enclosures: Copy for § 6110 purposes
One copy of this letter