Extension granted for 2010 carryover-basis election

Plain-English summary

The personal representative of an individual who died in 2010 sought additional time to file Form 8939, elect the special carryover-basis regime under § 1022, and allocate basis increases to eligible inherited property. The representative had retained an accountant for tax advice. The IRS found the discretionary-relief requirements satisfied and granted 120 days to file Form 8939 and make the allocations, with a copy of the ruling attached.

Ruling snapshot

• Request: Extend the time to elect § 1022 treatment and allocate basis for property inherited from a decedent who died in 2010
• Outcome: Approved; 120 days to file Form 8939 and allocate additional basis
• Key authorities: I.R.C. § 1022; Treas. Reg. § 301.9100-3; Notices 2011-66 and 2011-76

Full text (IRS public release)

Internal Revenue Service                                          Department of the Treasury
                                                                  Washington, DC 20224

Number: 201544012                                                 Third Party Communication: None
Release Date: 10/30/2015                                          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:B4
-                                                                 PLR-104474-15
                                                                  Date:
                                                                  June 24, 2015




Legend

Decedent                            =           --------------------------
Accountant                          =           ------------------


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

This responds to your personal representative's letter of December 12, 2014, and
supplemental correspondence, 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 an election under
§ 1022 of the Internal Revenue Code (Code) (Section 1022 Election) and to allocate
basis 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 of Decedent's estate retained Accountant to advise her on tax
matters. 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 § 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-104474-15                                2


Section 1022(b)(1) provides, in general, that the basis of property under § 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) and (C) provide that the aggregate basis increase is $1,300,000;
and that the aggregate basis increase is increased by—(i) the sum of the amount of any
capital loss carryover under § 1212(b), and the amount of any net operating loss
carryover under § 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 § 165 if the property
acquired from the decedent had been sold at fair market value immediately before the
decedent's death.

Section 1022(c)(1) provides that in the case of property that is qualified spousal
property, the basis of such property under § 1022(a) (as increased under § 1022(b)) is
increased by its spousal property basis increase that is 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 § 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 § 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 § 1022(b) and (c) on the return required by § 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 § 1022.

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

PLR-104474-15                                 3

generation skipping transfer (GST) tax) inapplicable to generation-skipping transfers
made in 2010. On December 17, 2010, the 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, § 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 § 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 § 1014(b)). Thus, § 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 § 1022
apply.

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.

Section 301.9100-3 provides the standards used to determine whether to grant an
extension of time to make an election whose date is prescribed by a regulation (and not
expressly provided by statute).

Requests for relief under § 301.9100-3 will be granted when the taxpayer provides the
evidence to establish to the satisfaction of the Commissioner that the taxpayer acted
reasonably and in good faith, and that granting relief will not prejudice the interests of
the government.

Section 301.9100-3(b)(1)(v) provides that a taxpayer is deemed to have acted
reasonably and in good faith if the taxpayer reasonably relied on a qualified tax
professional, including a tax professional employed by the taxpayer, and the tax
professional failed to make, or advise the taxpayer to make, the election.

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 § 1022. A copy of this letter should
be attached to the Form 8939.

PLR-104474-15                                  4

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.

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.

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.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

                                       Sincerely,

                                       Associate Chief Counsel
                                       (Passthroughs &Special Industries)



                                  By: ____________________________
                                      Melissa C. Liquerman
                                      Chief, Branch 4
                                      Office of the Associate Chief Counsel
                                      (Passthroughs & Special Industries)

Enclosures (2)

       Copy of this letter
       Copy for § 6110 purposes

cc: